It used to be that FHA loans allowed borrowers to drop the mortgage insurance premium if they had at least 22% equity in the property.
Now, as of June 3, 2013, most FHA loans will require mortgage insurance for the life of the loan. HUD informed all lenders offering FHA loans that automatic cancellation of insurance premiums will be rescinded and that any FHA loan higher than 90% of value at origination will be required to maintain the mortgage insurance for the full term of the loan. For FHA loans originated at less than 90% of value, the insurance remains in place for 11 years.
though mortgage rates have been at historic low levels for some time,
some homeowners have not taken advantage of mortgage refinancing. Of course, there is the question, will a refinance really benefit you?
People who have larger mortgage balances have the best chance of saving money on a refinance mortgage. For example,
reducing the mortgage rate by 1/2% on a loan amount of $400,000
could save more than $100 per month with a 30 year fixed mortgage rate.
You have to take into
consideration the cost of refinancing your mortgage. If it costs $4,000 to
refinance, it would take about four years to break even before you really start
saving any money. So, if you are only going to keep a home for a few years, it
may not be worthwhile to refinance, unless you are able to get a zero cost loan
with a lower monthly payment.Â Also,
if you are starting over on a 30 year mortgage, more of your monthly
payments will be applied to paying interest rather than paying down the