Asked by Susie, Estero, FL • Thu Mar 12, 2009
I have an 80/20 loan with $146K balance on 80% and $37K balance on 20%. Interest rates are 6.5% and 8.375%. According to Zillow, home is worth $156K but we have also had major improvements. Now with the 105% LTV refinance in the stimulus package, I would like to refinance. My question is...what is the best financial way to refinance an 80/20 loan? My mortgage company no longer offers these loans so I can't refinance into another 80/20 loan. They could refinance it into one loan, but then I will have to pay PMI, which will eat up the savings from the lower interest rate. Could I refinance only the 80% loan and base the loan to value ratio only on this loan (rather than having it based on both loans) to avoid PMI? Also, is it common for lenders to offer lender-paid PMI in exchange for a slightly higher interest rate? My lender is Suntrust Mortgage for both loans, and the loans were taken out at the same time (when I purchased the home) . Any advice would be greatly appreciated!
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