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Should I consider refinancing to eliminate FHA Mortgage Insurance?

I have a $820K FHA 203k loan home mortgage that started last year in Nov 2012. The balance is $805K and my interest rate is great - 3.75%. However, I'm paying $1000 a month in MIP, which is a real hardship and I'm anxious to drop. My understanding is that I need to make payments for at least 5 years before I can drop the MIP if I stay in my FHA loan. So I'm wondering if there are any refinancing options I can consider. I think our home is worth around $875K, and I'm not sure how long we're planning to stay in the home - likely another 4-5 years. I'm thinking that refinancing probably doesn't make sense, since rates are higher now, BUT if we're only going to be in our home for 4-5 additional years, couldn't it potentially be worth it if the rate increase is less than $1000/month? Thoughts?
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November 05 2013 - Brooklyn
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Answers (18)

After seeing this post from a few months ago I wanted to share with you that I work for a JUMBO Direct Lender and have the ability to offer JUMBO loans up to 90% financing in Brooklyn with NO PMI (80/10/10). 

Being that the market has been improving in NYC lately, you may currently have a better Loan to Value then before.  If so, it would make sense to obtain a 5/1 ARM according to current rates in order for you to save money and eliminate PMI on your FHA loan for the next few years.   

If that were the case you may not need to bring much to close at a 90% loan to value with closing costs and CEMA fees.  

I would start by calling your local Realtor to find out the recent sales in your neighborhood to get a better idea of where the value will come into play.  You never know, if there are some good comparable sales you may end up only needing to pay for the CEMA and an appraisal out of pocket!

If you have any questions please feel free to reach out to me by my profile, I would be more than happy to assist...

Good Luck!

Steve
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February 27
it surely behooves you to look.....perhaps even to an ARM type of loan.....even with a little higher rate, u should be able to YIELD some savings...good luck!
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February 27
Profile picture for pako42
There are 90% jumbo loans with no MI, some with 1st and piggy 2nd (yes those are back) and it could save you quite a bundle. Unfortunately, I am not licensed in NY nor is out company. Otherwise, I'd love to run the numbers and show you.  It's almost like having another renter with the income you'd save except you'll never have to evict them :)

We lend from Texas to the west coast
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February 26
It sounds like a good idea to at least shop some options and make an educated decisions.  I have helped many customers refinance in NY using CEMA as well.  Please feel free to contact me via my profile if you would like to discuss.
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November 18 2013
First off we would do a CEMA to eliminate paying the entire mortgage tax again. Secondly you can receive a loan at 90% loan to value without MI if you have a middle credit score over 720. Thirdly paying down the balance to receive a non MI loan is financially sound. Reason being if you are planning on selling your property within 4 to 5 years you are going to recoup your funds once you sell the property. As far as the rates if you went into a 5 year arm you can possible lower your rate even further. Feel free to contact me through my profile for a no cost, no obligation rate and fee estimate. If the numbers work, great. If not, at least you know exactly where you stand. I'm located in NY and understand the process of a CEMA. Let's hope the Lender doesn't say they lost the note.
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November 11 2013

Based on all of the information provided I have to assume you have a multi-family dwelling being that single-family FHA loans are capped at $729,750 and yours is over $800k. With that said, given your equity position, I think you'd be wasting your time (and an appraisal) trying to refinance. There are certain guidelines pertaining to Loan-to-Value (LTV) which must comply and, unless your home is worth more than you believe, I think you'll run into an appraisal issue with the value; my main concern. This would give you two options: bring a ton of funds to closing or withdraw your loan. Just my two cents. If there's anyway I can be of additional assistance please don't hesitate contacting me directly; my information can be found within my profile.


Kindest regards,

Paul F. Marzolla
Sr. Mortgage Advisor

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November 11 2013
Feel free to contact me through my profile for a no cost, no obligation rate and fee estimate. If the numbers work, great. If not, at least you know exactly where you stand.
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November 08 2013
@Joe is 100% correct!  You need to get the counsel of the mortgage professional experienced in NY loans.  The costs associated with real estate in NY are dramatically higher than most other states and you can avoid a large portion of the costs if you do a CEMA refinance.  And, they are not a simple process to accomplish.

Yes, I have closed many NY loans as a nationwide lender in years past and I was awe struck by the fees/taxes/ etc.  The benefits and detriments of your situation are not limited to a simple analysis of FHA vs.  any other loan program.

Wish you the best,

Deborah
NMLS #279125
WJ Bradley

"We Listen.  We Care.  We Deliver."
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November 07 2013
Thanks for picking my post apart Wayne.

The value was said to be around 875K which is close to 90% LTV but what if it came in higher??? We won't know the true value until the appraisal has been completed but If someone has to bring in a little money to save $87,000 over 5 years wouldn't you think that's worth it? I do but I like saving money!
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November 07 2013
Jay,
Let's see........you have a Jumbo 92% LTV  ARM on a $805,000 loan with no MI at 2.875%? Hmmm.....
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November 06 2013
Contact Chris Corica.  Because of the size of the loan and the location of the property, you are going to want to have a CEMA done to avoid about $16000 in mortgage taxes.  Important that you deal with some in NY experienced with these loans.
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November 06 2013
Profile picture for alexnoiz
Sorry I was talking about PMI that has nothing to do with your situation. With MIP you need to reach LTV 78% meaning that you have already paid 22% of your loan. Unfortunately, with MIP you can't have appraisal done on your home for the purpose of refinance. But you still have a choice of refinancing into conventional loan. Ask your lender.
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November 06 2013
Profile picture for alexnoiz
The thing, you are dealing with, called PMI (Private mortgage insurance). It will be automatically canceled once you reached 22% equity in your home based on the original price. You have to talk to your lender and see if you have any other options instead of waiting until your home equity reaches 22%. 
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November 06 2013

If your home will appraise for enough you should have some options to leave the FHA loan and acquire a conventional option with lower overall payments but you will need pay close attention to the costs involved vs. your monthly savings.  Considering your plan to leave in 4 to 5 years you need to be certain the costs are minimal enough to be recouped within the first year or two otherwise your actual savings will be much lower than you think.  I would also encourage you to explore the 5 year ARM route.  Definitely talk with a lender who is local to you.  Good luck!

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November 06 2013
Since you think you'll be gone in 4-5 years then I suggest getting into a 5 year ARM. The interest rate on a JUMBO 5 year ARM today is 2.875%.

Your mortgage payment on 805k would be $3,340 and you'll drop the monthly M.I. saving you around $1,450 a month. 

Contact me for details & start saving money in 30 days!
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November 06 2013
Run the numbers with your lender or financial planner and decide which option will be best for your current situation.  
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November 06 2013
If your home appraises for the right amount we can get you into a lower rate with no MI . If you would like see what your options are Great Plains National Mortgage has no application fees. 
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November 06 2013
If your home will appraise for $875K and have aprx $20K to pay your loan down to a 90% LTV, you could possibly refinance into a Conventional Loan, depending on your qualifications. You may need to split into 2 loans for an 80/10/10 and possibly use a 7/1 Arm on the First Mortgage for a good blended rate. Chris Corica, A Zillow lender, is in NY and can help you.   
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November 06 2013
 
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