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Profile picture for marvinr2009

What's the best way to eliminate PMI?

I have an FHA interest mortgage of 3.25 percent, refinanced a year ago through fha streamline.  We Bought the house 2 years 3 months ago, and have a remaining balance of about $255,000.  The current value of the house is about $390,000.  We have good credit, and no late mortgage payment since we bought the house.  My question is, i'd like to get rid of the PMI, what's the best course of action to eliminate this and have a better rate?  By the way, we bought the house at $280,000.  Thank you in advance! 
  • January 30 2014 - Upland
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Answers (11)

Your FHA Rate of 3.25 is outstanding.  But you need to know that PMI adds another .75% (some years less, currently 1.35%).  This is the NET EFFECTIVE monthly payment.  It's just Interest rate plus MI Factor.  Try 3.25 + .75 MI = 4.0% Net Effective cost of the loan.  A conventional refi loan with 25% or more in equity would have a rate near the current combination, or, as we are calling it, the net effective cost or monthly payment factor.  A 15 year rate might beat the combined Interest and MI nicely.  Rates fluctuate daily, to hear a number that is meaningful now, please call for today's rate - no bull.  My cell is [spam removed by Zillow moderator, see our Good Neighbor Policy] and I hope to hear from you.
  • January 31 2014
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Justin's answer below is spot on !!
  • January 31 2014
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You already have a great rate, but you can still look into refinancing into a conventional loan to get rid of your PMI. One great way to help you your rates is to switch into a conventional with a lower term, such as 15 years. In the long run this should save you money, but it would be best to compare your options side by side. The best thing for you to do is to speak with a lender such as myself to see if you can get started on refinancing. If you have any further questions or if you would like a loan or refinance, feel free to contact me.

Good Luck!
  • January 31 2014
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As others have alluded to, most likely refinance will only make sense if you are comfortable with a 15 year payment.    Your current rate is well below what a new 30 Year Fixed Rate would be without mortgage insurance, and at best you'd get a very small payment reduction in exchange for peramently increasing your interest rate.

If you are most comfortable on a 30 year term, and your streamline FHA Case number was before June 3 2013 (assuming it is since you said one year ago), then keep your current loan and work on paying the balance down to 218400 by the time your 60th payment is due on the current streamlined loan.    Once you make it to the point your MI will drop off and you can enjoy the 3.25 for the remaining life of the loan.
  • January 30 2014
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Profile picture for SeanGlaze
I am in the area and [promotional content removed by Zillow moderator] does a great job you can contact him via his Zillow profile and he can help you with your refi:

[Promotional content removed by Zillow moderator, see our Good Neighbor Policy]

I know he will do a great job for you let him I know I sent you over thanks!
  • January 30 2014
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New FHA loans after June 2013 have PMI for the life of the loan

Misty, MMI for life of the loan does not apply to All FHA loans originated after June 2013 and there is no FHA loan where the MMI stops at 80% LTV and 5 Years. 

OP, do as Shapiro suggested and get with a good lender, determine where it will make sense to give up the 3.25% rate to get rid of the MMI. 


  • January 30 2014
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Profile picture for JustinLeffew
If you bought the home before May 2009, I would say you're probably in the best loan program. Given it was later, you're probably paying slightly under $300/mo in mortgage insurance. If the value of your home is $390,000, refinance into a conventional loan. The rate will be higher but not $300/month higher. Conventional rates are currently in the 4's for a 30 year fixed. You can get lower with an adjustable rate or by shortening your term. 
  • January 30 2014
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New FHA loans after June 2013 have PMI for the life of the loan, but as Tracy stated in your case you PMI requirement is a minimum of 5 years and 80% LTV, with the caveat being the 80% was determined AT THE TIME OF THE LOAN and your loan documents will spell out that threshold (which in your case would make the 80% amount $224,000).  Assuming the 3.25 is a 30 year rate, your best option at this point may be to keep your current loan if you want to stick with a 30 year product.  A new loan will most like be over 4%, and while it may be cheaper per month in the short term you will be paying more interest over the life of the loan plus loan origination costs and in 2 years/9months assuming you reach the $224k principal your current payment should drop significantly.

If you were moving to a 15 year product the numbers may make sense, it would keep you at about the same or lower rate without PMI though your payments will be higher because the repayment is accelerated.
  • January 30 2014
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Profile picture for shapiroamg
I would look to refinance to a conventional mortgage. For your current FHA loan, the value will always be $280.

3.25 is a great rate, but with MI factored in, your rate and MI payment may be about what you would pay on a conventional.

Discuss with a Loan Officer and if it doesn't make sense now, figure a rate trigger that does.
  • January 30 2014
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marvinr, based on the data you provided it appears you have enough equity to eliminate mortgage insurance, but you will only be able to do so via a refinance into a conventional loan. Depending upon where they put your value at time of the streamline is going to determine how long it will stay on your current loan. At the time you did your streamline the minimum time required by FHA was 5 years, if they used a higher loan to value however, it could be set for longer. Your loan documents should specify.

You have a great interest rate at 3.25% - what is the term of your loan, i.e., 30 year fixed, 15 year fixed, etc.?
  • January 30 2014
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Profile picture for SeanGlaze
It depends how recently your loan was done new PMI "insurance" can only be removed with financing out of the loan.

If your loan is older you can "drop" the PMI once your have paid off 20% of your financed amount.

Contact your lender or review your specific loan documents to find which would apply in your case. 
  • January 30 2014
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