Refinancing question...

[Anonymous]

We're in the beginning stages of refinancing a home we bought last summer ('11). We pay PMI on our current loan and our lender has said the PMI will be no longer on the new loan but also said because of this (or something related to the PMI issue), we wouldn't be able to refi this property again. I'm not too concerned since the rates are so low - but is this normal?

[Anonymous]

Huh? Your lender isn't making sense. Or maybe you heard wrong?

If you refinance, you will have to get an appraisal. Based on how much your house is worth and/or if you are willing to bring cash to the table to bring your loan down to 80% of the value of your house, then you can get rid of the PMI. PMI has nothing to do with being able to refinance again.

[Anonymous]

He gave us an two refi options - one where PMI continues and one where we no longer pay PMI. With option number two, his explanation was, "You cannot lower rate later even after original loan amount falls below 78% LTV since Lender paid PMI upfront this option. That is the catch."

I just e-mailed asking for clarification but it's confusing me.

[Anonymous]

OP here. Nevermind. There seems to have been a language barrier in our e-mails... turns out he was saying we wouldn't need to refi again since the rates are so low now.

[Anonymous]

OP who is your lender? I want to get rid of my PMI

[Anonymous]

To the PP, any lender can help you get rid of PMI. What has to be true is that you now owe less than 80% of the appraised value on the new loan. so if you have a 400k mortgage balance, you better hope your home appraises for 500k or higher so that PMI isn't required.

You can get rid of PMI without refinancing buy paying for an appraiser yourself with your current lender and showing them that you are now 78% Loan to Value, but it is more tedious, and with home interest rates so low right now, it often is easier and cheaper in the long run to just refinance.

do an honest assessment of if you have less than 80% LTV.

Also you can always refinance later, but your lender is right that rates are likely as low as they are going to get for a while, plus you always pay something when you refinance and you start the completion clock all over again.

[Anonymous]

We recently refinanced and were able to get rid of PMI with a LTV more than 80% by using a home equiity line of credit (main mortgage 85%, line of credit 5%). Only catch was the interest rate on the main mortgage was a bit higher than you could get otherwise, but still way cheaper than paying PMI.

[Anonymous]

We recently refinanced and were able to get rid of PMI with a LTV more than 80% by using a home equiity line of credit (main mortgage 85%, line of credit 5%). Only catch was the interest rate on the main mortgage was a bit higher than you could get otherwise, but still way cheaper than paying PMI

With who?

[Anonymous]

Wells fargo

[Anonymous]

Thank you. I will look into that. Obviously our LTV is over 80%. So I was looking for an 80/10 or something similar.

[Anonymous]

I am a lender here in the DC area who has helped many clients and DC Urban Moms with refinances and purchases. You can get rid of mortgage insurance using two methods but it all depends on your appriased value and loan amount.

1. If your loan amount equals 80% or less of your appraised value, you won't need mortgage insurance. For example - $625K appraised value - $500K loan
2. If your loan amount is equal to 90% or less of your appraised value, you can split the the amount between two loans to avoid MI. This is commonly called an 80/10/10 or 75/15/10. For example 80/10/10 = $625K appraised value - 1st Loan = $500K, 2nd loan = $62,500

There are a couple of other MI options as well but I don't want to complicate things with too many details.

Feel free to contact me with other questions, etc at [e-mail] or [phone].