Getting an FHA loan was a mistake, would it make since to refinance to get out of it? (PMI, fees)

[lbj23]

I got an FHA loan because I was led to believe that I could get rid of my PMI (or maybe its MIP) insurance once my loan to value ratio was 78%.

I contacted my bank and they said that you have to have the insurance for a minimum of 5 years, regardless of your LTV ratio if you have an FHA loan. Im wasting thousands of dollars on this, its crazy.

I have a $110,000 loan @ 5.0% (just bought a house a few months ago) and im spending 60 dollars a month on this insurance

would it make since to refinance to a conventional mortgage if i could get a similar rate, or would the closing costs be too high?

[VictorBurek]

Your closing costs would be to much for it to make sense. Plus, if you go conventional you will have higher monthly PMI, or you will have to get a 2nd lien. I am assuming you put down very little money.

[AndrewSoss]

Originally Posted by VictorBurek

Your closing costs would be to much for it to make sense. Plus, if you go conventional you will have higher monthly PMI, or you will have to get a 2nd lien. I am assuming you put down very little money.

lol a 2nd? good luck.

he said that he thought he could cancel it at 78%, so I'm assuming he has the ability to get the loan down to under 80% for conventional.

5% should be no points and probably something like $2,500 in fees.

would take you 3.5 years to make it up in savings.

probably worth it if you are in for the long haul.

[dad2jules]

Another advantage is that FHA is almost always assumable- I won't say always without reading the note. When rates are up in future years, say at 6-7%, you will have a 5% assumable rate to enhance your property when it goes on the market. Assumability is going to be a selling tool in the future for people who have these low rates.