Profile picture for asimba02

Does a streamline re-fi make sense with current MI rates?

I have an FHA loan and closed on my home in August 2009.  I am currently at 5.5% interest rate with a low 0.55% monthly PMI rate.  Is it worth refinancing when my PMI rate will go up to 1.25%?

Loan details:
- 5.5% loan
- PMI rate is 0.55%. 
- house value very slightly upside down
- current on payments
- 800+ credit score & plan to stay in the home for at least 5 years.

The drastic increase in PMI rates significantly reduces the savings I would gain from the mortgage rate decrease.  I keep hoping they will come out with a HARP-type program for those of us in this situation, but it hasn't happened yet and I'm expecting rates to go up after the election.  Any thoughts?
  • November 05 2012 - Sacramento
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Answers (7)

Profile picture for New American Funding
Since you closed in August of 2009 you will be subject to the new higher MI vs. the .55% you have now.

One suggestion I have not seen posted that you may want to consider is a plan to get out of MI.  You can look at a 5/1 ARM loan to get a very low rate.  Keep paying the same amount you are paying now and have the extra go to your principal balance.  The goal is to accelerate the principal balance so you can get to 90% Loan to Value or to 80%.  At 90% you can look at another loan where the lender pays the MI or you can look at a first to 80% and a 10% second - you drop the MI - or, by aggressively paying down the balance, the goal is to get to 80% so you can then refinance to a conventional loan.

Do you have VA Benefits?  You can refinance up to 100% of your loan to value into a VA loan (if that is available to you)

In order for MI to drop on your current .55% you need to get down to 78% loan to value, based on the purchase price as the value.

These are simply options to consider.....
  • February 24 2014
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If you are at 5.5% and current rates are at around 3.5% even with higher PMI you should see some nice savings and even more once the PMI drops off if you are planning on staying in the home for a longer time period.
  • November 08 2012
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Simba structured correctly you should be at 1.2% MMI rate, and most likely you can drop your rate by over 2% with low/no costs (depending on loan amount).    Huskers is correct you will get an immediate short term benefit and a much larger long term benefit by securing a very low fixed rate for the life of the loan.

I am commonly seeing streamlines that can benefit with the same MI rate you have and existing interest rates lower than your 5.5, I think you will find the numbers worth digesting.   
  • November 06 2012
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Profile picture for asimba02
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"I thought a FHA streamline the PMI stays with the loan (0.55%). She would have the new PMI rate only is she wanted a new loan verus a streamline? I thought the purpose ws to decrease the payment at no cost to the customer. I'm not sure just asking. Yes,I agree,  it resets but her payment would be a decrease."

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Unfortunately, that is currently not the case.  A re-fi would trigger a new PMI contract at the 1.25% rate versus my current 0.55% rate.  FHA loans initiated after June 1, 2009 unfortunately are left out of HARP 2.0 and all the other programs intended to help reduce monthly payments.  I keep hoping this will change. 
  • November 06 2012
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Profile picture for user318613
I thought a FHA streamline the PMI stays with the loan (0.55%). She would have the new PMI rate only is she wanted a new loan verus a streamline? I thought the purpose ws to decrease the payment at no cost to the customer. I'm not sure just asking. Yes,I agree,  it resets but her payment would be a decrease. Help.
thanks
  • November 05 2012
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Profile picture for Go Huskers
"Depends on who your servicer is...ie. who you write the check to each month. "
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No it doesn't. The current servicer is irrelevant to the question. What is relevant is the current rate, when the current mortgage insurance is scheduled to come off and the length of time they plan to be in the property. If they do a streamline refi it will reset  the mortgage insurance to at minimum, another 5 years so if it's scheduled to come off before that, it may not be worth it. At a 5.5% rate they will probably have a slight benefit in the short term. They should be able to meet the 5% net tangible benefit requirement. The true savings would come once the mortgage insurance goes away.

Asimba, have an experienced California loan officer look at it for you. Finding an FHA streamline refinance without appraisal is not difficult at all.
  • November 05 2012
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Depends on who your servicer is...ie. who you write the check to each month. There are a few left who are doing lender to lender streamline refinances with no appraisal required. Contact me at your convenience.

Nevin Bunnell
C&F Mortgage Corporation
Virginia Beach, VA
  • November 05 2012
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