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Can we refinance our FHA loan into a standard loan to get rid of PMI after recently refinancing?

We recently refinanced our FHA loan and got a good rate.  However, after tracking the estimated worth of our home, it is over $100k more than what we owe.  It seems we should be able to get rid of the PMI and refinance into a standard loan.  Can you get rid of PMI on a FHA loan?  After you refinance an FHA do you have to wait a certain period of time before refinancing?
  • August 05 2013 - Richmond
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Answers (6)

I recommend to all my customers to refinance from FHA to conventional if the value is there, especially if your purchased or refinanced this home after June 2013. These FHA loans MIP will never go away and could make a lot of sense to refinance. I would need to calculate the numbers and see if there's a benefit. If this loan taken out pre June 2013, has it been 5 years since you got the loan? If yes, it is possible to apply and get it removed.
  • August 12 2014
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Yes you can. And you should.

Refinancing and removing mortgage insurance can save you hundreds of dollars a month and thousands each year. But understanding whether or not you are able to have the MI removed all depends on when the loan was taken out. For FHA borrowers who took out their loans prior to June 4th 2013 they posses the ability to have it removed after 60 months, just as long as they posses 22% equity in the home. For those who took out FHA financing after June 3rd 2013, they're actually required to keep mortgage insurance for the life of the loan.                                                                                                                                                                                                                                                                                                                  
For those borrowers who cannot have the MI removed it is always wise to consider your refinancing options. And for those folks who would need to refinance all you need to do is posses at least 10% equity in you home to remove the MI. Again once you have reached 10% equity in the home you are eligible. There are no time frame restrictions or limitations that require you to keep your current loan any longer than it take to qualify for the now.                                                                                                                                                                            If you have any questions or would like my assistance in qualifying please feel free to contact me through Zillow or my website. Thank you and good luck!
  • May 11 2014
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I have a number of clients in a similar situation.  Many of them in the last year have gain 10% in the value of their home and pending credit and income requirements have been met are choosing a conventional option with MI.  However if there is less than 20% equity in your home you will still have MI if you choose a conventional single loan.  However the MI rates are lower on conventional loans but interest rates on conventional loans are higher.  What you need to do first and foremost is find an accurate value of your home and determine if you have 20% equity.  If you do not depending on what you current rate is it may not make since to refinance since interest rates have climbed up nearly 1% since early May.
  • August 05 2013
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Hi Ali,

If your FHA case number is before June 3, 2013, you can apply to have the MIP removed after 5 years if you have been paying the loan down aggressively.  Otherwise, it will automatically be removed when your loan is 78% of the original price (close to 10 years on standard amortization).  If your case number is after June 3, 2013, the mortgage insurance will last the length of the loan.  The only way to remove the insurance would be a refinance to conventional.  If you have at least 5% equity, a refinance would probably make sense (the interest rate may be higher, but the mortgage insurance would be less).  With 10% equity, you could look at a second loan or equity line as a replacement to MI.

There should not be any time constraint on refinancing to a new conventional loan from FHA.  There may be a "seasoning" requirement after you purchased the home, but not a refinance.

I hope that helps, and let me know if you have any other questions.
  • August 05 2013
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If you refinanced before June 3, 2013 the MI min. time period is 5 yrs.  If you refinanced after that date on a 30 yr loan term the MI is for the life of the loan. You could refinance to a conventional loan if you have 20% or more equity and eliminate the MI. Rate may be higher now, but depending if you are paying 1.35% MI then it likely is worth it.  I would normally suggest that you talk to the lender that closed the refinance, but hesitate because I am concerned why you didn't do a conventional loan vs FHA when you refinanced "recently". How much is your loan balance and current interest rate? What was date of your refinance?
  • August 05 2013
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The answer is --- you can refinance and potentially remove the MI. You do have options. We just need to make sure it makes sense for you. By the sound of it....getting rid of the MI is worth it however, Conforming rates are slightly higher than FHA rates. If you just refinanced, your loan officer should have advised you of your options. 

I am in Oakland and can explain to you your options: by phone, in person or email. Contact me through my profile.
  • August 05 2013
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