Financing in 20024>Question Details

Clint Davis, Home Owner in 20024

Should I refi now and start paying PMI again or wait until my home value gets back up above 20%?

Asked by Clint Davis, 20024 Sat Aug 6, 2011

I want to refinance my mortgage so that I can take advantage of lower rates. My current rate is 5.75 and rates are below 4.75 now. Typically 1 point is the minimum lower rate that "they" say you should refinance at. Problem is I no longer have 20% equity in my place so I'd have to start paying PMI again. Should I refi hoping that my value goes back up in the next year or two and I can lose the PMI, OR wait until then?

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Don't get too hung up on the rate.
I my opinion no one here has enough information about your situation to give you advice, but if you have to start paying PMI, (either up front or with payments) my gut says it might not be a good idea. A financial planer that you trust or accountant is probably the best person to help you answer this question.

There is more to this question than just the rate drop. How long do you think you will stay in the property? How many years do you have left on the loan? How much interest will you pay from this date forward with your current loan v/s how much will you pay on the new loan?
When you refi, you reset the amortization and start paying almost nothing but interest again. That will reduce your tax burden, but probably increase the total amount you will pay in interest over the life of the loan.
How much will your payment drop if you refi? Don't for get to include the PMI. How badly do you need your payment to drop? Could you keep your loan maybe make one additional payment per year and therefore significantly cut your number of future payments and effectively cut your current rate?


I refinanced this year. I had 25 years left on my loan when I refinanced. My rate went from 5.87% to 4.125%, I cashed out some equity and my new loan is a 20 year loan. My payments went up very slightly, but I knocked 5 years off my loan and payed off another debt.

I refinanced with Met Life. Colleen McQuillen is the leder I used there. cmcquillen@metlife.com
1 vote Thank Flag Link Mon Aug 8, 2011
Clint, Believe it or not, I am going to side with an agent on this question. Robert is 100% right. No one can answer your question with going over all of the details of your current loan (type, length you have had it), your goals (how long you plan to stay in the house, debt and equity goals) and running all the numbers. The answers are in black and white...you just need to find a mortgage professional who will provide the numbers to you so you can make a educated decision. I suggest you check out http://www.mortgagecoach.com and find a local mortgage professional in your area. Mortgage Coach has the best tools for educating consumers I have ever used. Best to you!
0 votes Thank Flag Link Mon Aug 8, 2011
Hey Clint-

PNC does not offer up-front PMI at this point. I would take Nick's offer into consideration but make sure he is aware that the property is a COOP.

Hope this helps!

Brad
0 votes Thank Flag Link Mon Aug 8, 2011
Clint- you should refinance right now, and specifically this weekend.

You don't have to pay PMI if you have less than 20% equity, the better option is lender paid mortgage insurance. This is where the lender pays a 1-time premium to cover your mortgage insurance at settlement. This can be built into your rate. With 5.75% you can save significant money going to near-current rates and even look at a no-cost refinance where all of your 1-time closing costs are covered.

Rates are at the lowest point for 2011, the importance of making a move this weekend is that the US debt downgrade announced last night will very likely make mortgage rates go higher Monday morning.

I am working all weekend and would be happy to go over numbers with you. Feel free to contact me 301-585-7283.
Web Reference: http://www.nickhomeloan.com
0 votes Thank Flag Link Sat Aug 6, 2011
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