getting rid of PMI on current mortgage (sales, loan)

[Melissa Schwartz]

Originally Posted by MikeJaquish

So, possibly a refinance could be in order to tap appreciation equity to eliminate PMI?
Except, at 3.75, He has a dandy rate already...

Yes 3.75 is a good rate, and it's possible to refinance and get that or possibly a slightly better rate. Although I'd suggest looking at a shorter term, reducing rate, and removing MI... maybe a 20 year mortgage

[MikeJaquish]

Originally Posted by Melissa Schwartz

Yes 3.75 is a good rate, and it's possible to refinance and get that or possibly a slightly better rate. Although I'd suggest looking at a shorter term, reducing rate, and removing MI... maybe a 20 year mortgage

So, the interest rate benefit of refinancing is pretty slim, but removing PMI and the resulting cash flow could make it worthwhile?


What might a 20 year rate be?
I saw a 15 year at 2.875 the other day.

[Melissa Schwartz]

Originally Posted by MikeJaquish

So, the interest rate benefit of refinancing is pretty slim, but removing PMI and the resulting cash flow could make it worthwhile?


What might a 20 year rate be?
I saw a 15 year at 2.875 the other day.

Well, the range would be 3.375 - 3.625 ish... of course this is taking into account many factors...

[MikeJaquish]

Originally Posted by Melissa Schwartz

Well, the range would be 3.375 - 3.625 ish... of course this is taking into account many factors...

Yeah, that is not terribly appealing, I would guess. Particularly when he already is not inclined to refi.
I guess the size of the loan would determine if the benefit of dropping PMI would make it worthwhile.


Of course, a refi with removal of PMI and a similar payment would mean that all of the monthly would be applied to principle and interest rather much of it covering that PMI payment.


It seems that often borrowers, agents, and lenders get too focused on rate and need to always consider the big picture.

[Melissa Schwartz]

Originally Posted by MikeJaquish

Yeah, that is not terribly appealing, I would guess. Particularly when he already is not inclined to refi.
I guess the size of the loan would determine if the benefit of dropping PMI would make it worthwhile.


Of course, a refi with removal of PMI and a similar payment would mean that all of the monthly would be applied to principle and interest rather much of it covering that PMI payment.


It seems that often borrowers, agents, and lenders get too focused on rate and need to always consider the big picture.

Sometimes it's hard to see the big picture! First you've got to see what's the main goal, pay off house or reduce payment.

[SaucyAussie]

Question for those who have done this - once PMI is removed, does this result in an immediate reduction in the monthly payment, or do you need to wait for the next escrow analysis? (Assuming PMI is being paid out of escrow)

[jperryrocks]

If it helps any, my original loan balance was around 230k when I bough it in Feb 2013. I've paid it down to about 209 after 4 years.


But with the way the market has exploded, my townhome is worth ~300k or so, and have several recent comps to prove it. And that's being a little on the conservative side.

[boardjnky4]

I have an FHA, I called my bank and they said that FHA is super strict about the 20% of PURCHASE PRICE thing and that there's almost no chance they would budge even with an appraisal.

[keadlez]

Originally Posted by jperryrocks

If it helps any, my original loan balance was around 230k when I bough it in Feb 2013. I've paid it down to about 209 after 4 years. But with the way the market has exploded, my townhome is worth ~300k or so, and have several recent comps to prove it. And that's being a little on the conservative side.

Feb 2013 to Feb 2016 would be three years rather than four.

Please realize your equity assumption based on comps is speculative at best and means very little to the bank. Let's say your home did increase in market value 30% over three years due to booming housing market. All it would take is a stock market crash to have immediate impact on the economy and housing market, eroding that potential equity, perhaps taking your market value back to the purchase price or even lower in a matter of only a few months. Crashes can occur quickly, leaving you underwater on the loan.

The bank has to consider that risk, therefore mortgage insurance calculations are based on the original purchase price, not what it might sell for, speculatively.

So that extra $70k that you feel like you've acquired is not a "real" $70k unless you proved it existed by selling the home right now and pocketing the money.

[keadlez]

Also is it just me or is $200-220 a month PMI on a $230k-ish loan crazy high?