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Started By
Message
Home Loan - Refi vs PMI Question
Posted on 3/10/15 at 1:49 pm
Posted on 3/10/15 at 1:49 pm
In 2012 i bought a house. Total cost was $206k, put 11% down. My loan type is a Farm Loan @ 3.5%. I have paid an additional $7 a month since the start just to make it a round number 
I pay $61/month in PMI.
Is it possible for me to eliminate the PMI by refinancing?
The area i live in is growing quickly which should increase my property value. I have also added items to the home (gutters, shutters, fence, longer driveway) which hopefully will bring up the value of the home. Am i on the right track with my thinking to eliminate the PMI?
I pay $61/month in PMI. Is it possible for me to eliminate the PMI by refinancing?
The area i live in is growing quickly which should increase my property value. I have also added items to the home (gutters, shutters, fence, longer driveway) which hopefully will bring up the value of the home. Am i on the right track with my thinking to eliminate the PMI?
This post was edited on 3/10/15 at 1:51 pm
4
Posted on 3/10/15 at 2:06 pm to SeaPickle
Yes, as long as your home appraises at an amount that gives you 20% equity, you can refinance and eliminate PMI with a conventional loan.
Posted on 3/10/15 at 3:03 pm to SeaPickle
You should not have to refinance to eliminate PMI, if you have 20% equity in the home. As I understand, it's really up to the lender. If you believe that you have 20% equity or more, but the lender will not remove PMI, then your next best bet is to shop around for refinancing and see if anyone else will not require PMI.
Posted on 3/10/15 at 3:13 pm to HurricaneDunc
quote:
Yes, as long as your home appraises at an amount that gives you 20% equity, you can refinance and eliminate PMI with a conventional loan.
OR
The lender pays PMI for you in exchange for a slightly higher rate than you would otherwise get.
Obviously, you may not want to do this if it raises your rate, but if you get the lender paid PMI AND lower your rate, its a slam dunk.
Posted on 3/10/15 at 4:03 pm to SeaPickle
Relatively new FHA homes don't allow you to get rid of PMI unless you refinance... are farm loans (Do you mean Rural Development loans) allow you to get rid of PMI or is it life of loan?
Posted on 3/10/15 at 4:16 pm to LSUFanHouston
If its a RD loan, it's for life.
Posted on 3/10/15 at 4:29 pm to SeaPickle
Depending on when it was is 2012, you've probably knocked off about $10k in principal. So assuming you meant the purchase price was $206k, and you put 11% of that down you're looking at the following:
Current balance of roughly $173k, and LTV ratio of about 84%. This assumes the house still appraises for the same value as before.
Lots of factors to consider. How long you plan on staying there, how much cash do you have on hand to refinance and possibly come up with the difference to be at 78%, etc. Rates are on the upswing about .375% the last month or so also.
Current balance of roughly $173k, and LTV ratio of about 84%. This assumes the house still appraises for the same value as before.
Lots of factors to consider. How long you plan on staying there, how much cash do you have on hand to refinance and possibly come up with the difference to be at 78%, etc. Rates are on the upswing about .375% the last month or so also.
Posted on 3/11/15 at 11:31 am to TigerDeBaiter
Home was purchased December 2012 for 206k. Loan was 184,6xx. Current principal is 177,3xx.
I guess the farm loan is the same as the RD loan. We plan on staying here for at least 5 more years. What cost besides a new appraisal am I looking at?
I guess the farm loan is the same as the RD loan. We plan on staying here for at least 5 more years. What cost besides a new appraisal am I looking at?
This post was edited on 3/11/15 at 11:34 am
Posted on 3/11/15 at 11:41 am to TigerDeBaiter
I need to get into the appraisal game.
I bought my house for 325k in May 2014. At that time it appraised for 345k.
Going through refi now 9 months later and of course was nervous, needed it to appraise for at least 340k. It appraises for 360k, which, I'm not complaining, gave me an even better deal than I had originally gotten from the new lender.
shite's hilarious. I don't believe any of these numbers, or maybe I'm just a real estate savant or blind luck.
I bought my house for 325k in May 2014. At that time it appraised for 345k.
Going through refi now 9 months later and of course was nervous, needed it to appraise for at least 340k. It appraises for 360k, which, I'm not complaining, gave me an even better deal than I had originally gotten from the new lender.
shite's hilarious. I don't believe any of these numbers, or maybe I'm just a real estate savant or blind luck.
This post was edited on 3/11/15 at 11:43 am
Posted on 3/11/15 at 11:51 am to SeaPickle
So if it's RD, you gotta refi out of RD to get rid of it. Closing costs would include app fees, origination fees, etc. Some will do no cost loans and either roll the amount into principal or charge a higher rate.
Posted on 3/11/15 at 12:00 pm to LSUFanHouston
I guess my next step is to verify Farm Loan = RD or not.
Posted on 3/11/15 at 12:41 pm to SeaPickle
Just ball parking but assuming you owe 170k I'd expect a refi to cost somewhere in the 4-5k range. For this exercise let's split and say $4500
4500/61 = 73.7 months, so your break even on Financing out strictly to remove PMI is just over 6 years, plus restarting amortization of loan.
4500/61 = 73.7 months, so your break even on Financing out strictly to remove PMI is just over 6 years, plus restarting amortization of loan.
Posted on 3/11/15 at 12:46 pm to ItNeverRains
quote:
Just ball parking but assuming you owe 170k I'd expect a refi to cost somewhere in the 4-5k range. For this exercise let's split and say $4500
4500/61 = 73.7 months, so your break even on Financing out strictly to remove PMI is just over 6 years, plus restarting amortization of loan.
It is so highly variable its pretty wild. I'm refi-ing now and my closing cost will be 0 with lender credits, my rate will fall, and PMI will be lender paid. My break even will basically be immediate.
Posted on 3/11/15 at 1:21 pm to Teddy Ruxpin
I get that as well. Just depends what the rate is for rolling in PMI/Lender credits. Not saying it can't be done, I just did it in January, but not to simply remove PMI. Also knocked $600/mo off mortgage and will owe exact same amount on principal in 5 years (did 5/1 @ 2.5%)
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