Mortgage refi advice

[Steve BWV'99]

Hello,

I was wondering if anyone had some advice for our situation.

We currently have a 20 year/4.75% mortgage that I would like to move to a 15 year, lower interest rate. There are 2 issues we face:

1) Current value of the home is 250,000 and we owe 238,000 so we don't have enough equity for most refinance options without paying PMI which I dont want to do.

2) We refinanced in Oct 2010 to the above rate so we don't qualify for harp since it requires loans to be sold prior to May 2009.

I have contacted my current lender and credit union and because of our LTV ratio we would be paying PMI. Are there any other options? We are currently paying extra principle to pay it off in 15 years but could save some money refinancing. We plan to be in the house for a long time (approx 15 more years).

Thoughts? Currently my thinking to is pay down principle to meet the LTV so I can refi without PMI

Its a bit frustrating since our credit is excellent and we haven't missed a payment.

Thanks for any input

 

[mrsklamc]

Try a different credit union. Ours does not do PMI, at all.

 

[LynnTH]

See how much PMI would be? We just refinanced in August to 3% for 15 years. Since we bought the house 3 years ago the value has decreased. We did not have enough for PMI either. You can choose to pay the PMI up front also. We are paying on ours about $100 a month til next February. So, about 18 months ($1800). But, we are saving about $67,000 in interest. So, for us it was kind of a no brainer to do this.

 

[Steve BWV'99]

Checked with my credit union. I will be required to have 2 years of PMI and feel certain that I will reach the 20% equity at that point. It would be $97 month for around 2300 for the 2 years. The biggie though is the interest saviings over the life of the 15 year. I will save around $50K compared to my current loan and pay it off sooner. Closing costs will be about $900 at 2.875% rate.

We have no plans to move and my goal is to pay down mortgage faster, not really lower my monthly payment

Still thinking about it

 

[emmababy]

You can split loan into an 80/10 or ask them for lpmi.

 

[Swimalie]

Here is a good trick that you can think about for paying off sooner - take your monthly payment and divide by 12. Then add in that amount towards the principle only, each month. So say your payment is $1200/12 is $100 added in so you pay $1300 each month. This will cut 7 years off a 30 year loan and doesn't cost the refinancing.

Another thing you can do is pay the difference out of pocket to get the house value to the 20%.

 

[surfgirl]

Hello,

I was wondering if anyone had some advice for our situation.

We currently have a 20 year/4.75% mortgage that I would like to move to a 15 year, lower interest rate. There are 2 issues we face:

1) Current value of the home is 250,000 and we owe 238,000 so we don't have enough equity for most refinance options without paying PMI which I dont want to do.

2) We refinanced in Oct 2010 to the above rate so we don't qualify for harp since it requires loans to be sold prior to May 2009.

I have contacted my current lender and credit union and because of our LTV ratio we would be paying PMI. Are there any other options? We are currently paying extra principle to pay it off in 15 years but could save some money refinancing. We plan to be in the house for a long time (approx 15 more years).

Thoughts? Currently my thinking to is pay down principle to meet the LTV so I can refi without PMI

Its a bit frustrating since our credit is excellent and we haven't missed a payment.

Thanks for any input

Who says your house is "worth" $250k ? Is that a recent appraisal? The reality may be good... maybe the house appraises for more than $250k and you don't need PMI. Maybe it is the other way... you are now underwater.

Would be worth asking that question. Have to look at all assumptions to verify information.

Also, we just went through a re-fi - the paperwork is INSANE. Worse than 18 months ago. We had to document ridiculous things. Be prepared for big time hassle. Do you know what the new rate would be? Is it worth or just continue to pay down extra/month?

 

[DawnM]

She would save far more interest by refinancing.

OP, I would run the numbers. Most likely, you will still do much better going ahead and paying PMI for a while and getting that rate lowered.

Bankrate.com has some great calculators.

Here is a good trick that you can think about for paying off sooner - take your monthly payment and divide by 12. Then add in that amount towards the principle only, each month. So say your payment is $1200/12 is $100 added in so you pay $1300 each month. This will cut 7 years off a 30 year loan and doesn't cost the refinancing.

Another thing you can do is pay the difference out of pocket to get the house value to the 20%.

 

[Shelly F - Ohio]

Hi steve,

What you have to think about is that even if you have to pay PMI think of ALL the interest you will save! Going from 4.50 to 2.75 could save you about $400 a month on interest. I used an arm table to figure out about how much you are paying in interest here is the link, http://www.hsh.com/calc-amort.html. Then I put in what you want to refi at and it shows a savings of $400 so if you have to pay PMI you will be saving $300 a month.

i would refi and pay the pmi. Stay on your current plan to pay extra on the prince.


So you will save $3600 a year on interest. That is a huge amt of money to put in someone elses pocket.

We just closed our refi loan this week and man it feels good to know that extra interest is not filling some elses pocket. Paperwork was a piece of cake as our bank has e-sign (electronic signature) Title agent came to our house and was gone in less than 40 minutes. We refied with New York Community Bank.

GO FOR IT.

 

[My2CrazyGirls]

Have you looked into an 80-10-10 loan to avoid the pmi?

 

[mrsklamc]

I know you checked with your credit union, but have you tried a different credi union?