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Old 06-28-2015, 05:14 PM
 
83 posts, read 56,739 times
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So I am looking to refinance my current mortgage which is at 71%. I currently have an FHA loan with PMI.
(based on the next door neighbors sale which happened last month and our houses are identical)

I want to take some cash out to pay down a private student loan I have, but I want to know how much I can draw without getting PMI if I go conventional.

Is it up to 80% LTV to eliminate PMI, or could I refinance to 85% LTV?

Anyone familiar with these? Basically I want to draw as much as I can without having to pay any extra PMI. If I can draw to 85% LTV and have no PMI, that would be picture perfect....if its possible?

Thanks,
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Old 06-28-2015, 05:29 PM
 
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80% x Appraised value - (closing costs, and escrow account re-fill) = Cash In Hand.

Rate will be slightly higher if you do a cashout at 80% as opposed to a "Rate/Term" (no cashout) refinance under 75% of the value, but that's your call. Same concept in play if you choose to not escrow taxes and insurance (slightly higher rate).

You will receive a check from your existing Loan Servicer in the amount of your Escrow Balance, and a new escrow account will require an amount necessary to pay those bills when they are due. So it's kind of roundabout, getting the escrow refund after you've closed on the new loan and paid into the new escrow account.
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Old 06-28-2015, 07:31 PM
 
Location: Phoenix AZ
5,920 posts, read 10,437,079 times
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With my local credit union, i can get the best rates at 75% ltv with no escrow acct. Best bet is prolly to make some calls & see what's out there where you are. You can definitely ditch the pmi, the only question is how much of the other loan you can pay off. Congrats, you can't really lose on this deal!
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Old 06-28-2015, 08:52 PM
 
3,166 posts, read 4,813,434 times
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We are actually doing the same thing and closing tomorrow, although we aren't trying to cash out any. I think we needed to be at 78%, but it might have been 80%.

Keep in mind closing costs (outside of your required escrow amounts) are still going to be at least a couple $$$. Our lender rolled that into the cost of the mortgage for us (thus increasing the balance, but it is still what we are after because we eliminate PMI), but if you don't want to do that, be prepared to have the cash.
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Old 06-29-2015, 08:27 AM
 
83 posts, read 56,739 times
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My real question is do I need to be under 80% to drop PMI? To pay down the other debt in full I would need to draw to 85%...would that mean under any type of mortgage (conv, arm etc) I will be required?

Or do they prorate it at all if I am just a tad over 80%.

I only plan to stay in this house for a few more years but I already calculated even with closing costs I would still save on interest and free up cash flow.

Also why wouldn't I want an escrow acct? They pay all my stuff for free! Less work for me!
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Old 06-29-2015, 09:42 AM
 
3,317 posts, read 7,251,326 times
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You cannot do a non-FHA cashout mortgage over 80%. FHA, you can go to 85%, but you would again have the FHA Mortgage Insurance.

Some people prefer to handle taxes and insurance on their own.
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Old 06-29-2015, 12:27 PM
 
Location: New York
2,251 posts, read 4,160,232 times
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Missing information? Loan balance, existing interest rate and how long has OP been had current loan (remaining term)?
  • Agree with Pfhtex - rate will be slightly higher if you do a cash out at 80% as opposed to a "Rate/Term" (no cash out) refinance under 75% of the value. Including a better rate if you have an escrow for your taxes and insurance.
  • When LTV reaches 78.5%, providing your FHA loan was originated prior to June 2013. Contact your lender to have the MI (FHA mortgage Insurance) removed. 71% LTV sounds good, they might allow only an AVM (computer) appraisal. If not they will require you to pay $350/$450 for their appraiser to appraise your home. (I would definitely mention your neighbors similar property value).
  • Only planing to stay in house for a few more years, it might not be worth the cost to refinance. Dropping the Mortgage Insurance there is immediate savings. The OP would further need to analyze if it is cost effective to refinance into a conversation loan (even refinancing possibly into a shorter term). By adding closing costs of a new loan (generally 5% of the loan amount). Comparing the existing rate with the balance, if there is enough savings in the final payment.
  • Why not refinance first mortgage into conventional mortgage to 75% LTV. To take advantage of the lowest interest rate with your first mortgage. Then do a HELOC (2nd Mortgage) - to pay off your student loans and any other debt. This eliminates PMI (conventional principle mortgage insurance), also allows advantage of tax deductible savings.
  • Plus if you decide to keep to property, is would eliminate to need to refinance in the future.
My $00.02...

.
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Old 06-30-2015, 01:43 PM
 
12,404 posts, read 9,195,957 times
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Quote:
Originally Posted by ps2cho View Post
My real question is do I need to be under 80% to drop PMI? To pay down the other debt in full I would need to draw to 85%...would that mean under any type of mortgage (conv, arm etc) I will be required?

Or do they prorate it at all if I am just a tad over 80%.

I only plan to stay in this house for a few more years but I already calculated even with closing costs I would still save on interest and free up cash flow.

Also why wouldn't I want an escrow acct? They pay all my stuff for free! Less work for me!
If you're just a tad over 80%, then get the new loan at 80%, and then get a HELOC. No PMI.
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Old 07-01-2015, 12:14 PM
 
Location: MID ATLANTIC
7,598 posts, read 17,614,249 times
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Why don't you refinance, get out of the pmi, (not everyone prices differently between an 80% and 75% LTV) and get a heloc up to 90% of value to use as you need. (Not everyone has price adjustments on the first trust for a combo loan). Whatever you are short on to make it to 80% can be added to the heloc. I can't tell what state you are in - that would need to be revealed to determine eligibility.
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Old 10-06-2015, 09:56 PM
 
3 posts, read 2,528 times
Reputation: 10
What state is your home in? You may have more options.
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