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Question about FHA loan and refinancing with PMI
Hello, I don't usually post on here so thanks in advance for your help.
We've been in our home since 2003. We refinanced our FHA loan 2 years ago and our current interest rate is 5%. We owe about $171,000 on our home and our current property taxes have our home assessed at $141,000 which I doubt we could even sell it for. We'll be in our home for several more years and I'd like to refinance but the issue that I've found when talking with a few mortgage lenders is that the PMI rate has gone up so instead of paying around $60/month for PMI we'd be paying almost $100 more than we are paying now so even though our interest rate would be going down to 4% or even lower it doesn't end up being that great of a deal with the increase in our PMI payment. We have excellent credit and are current on our payments. Is there any options you can think of for refinancing that would make it worth our while? Have you heard anything about an FHA class action lawsuit and would that affect our payout if we refinanced?
Thanks!
Photo taken at 16 months old
Re: Question about FHA loan and refinancing with PMI
First your tax assessed value does not equal your house appraisal value. However, if you don't think you can sell for even $141k that means you are underwater. Unless your mortgage is backed by Fannie Mae or Freddie Mac, I doubt you can refinance without bringing money to the table. If one of those lenders hold your mortgage, I believe you could refinance up to 125% of the value of your house. If not and you want to refinance into another FHA mortgage, you'll need 3.5% equity in the house.
I believe it was this April when the FHA calculation for monthly PMI changed and you are correct that it's gone up quite a bit. 5% is still a great rate and you aren't going to save any money by refi'ing into an FHA mortgage (plus you'll have closing costs and reset your mortgage to a 30 yr payoff instead of the 28 you have left).
In your situation, I would not pursue trying to refi. You do have a great rate still!
Tax asessments have nothing to do with your appraised value. If you feel you are underwater, you could try doing an FHA streamline w/o appraisal. You will need to bring some cash to the table since you can not roll the costs and pre-paids into the loan amount.
This. Also, you can buy off your PMI if you do a non-FHA loan. I think if you really need to refi, you need to get an appraisal done to figure out how much your home is worth.
Thanks for the help. I should have stated that we were planning on doing an FHA streamline since we are underwater. We don't need to refi just would love to capture a rate around 4% or below since the rates are so low right now. Thanks for your help. Just wanted to make sure there wasn't something I was missing.
Photo taken at 16 months old
Wait a month or two until "HARP 2" comes out. This is going to save a lot of people. I'm a real estate agent and this is all our loan officers are talking about. It's the new re-finance program to help people that are underwater. No appraisal needed, no loan to value, rental properties are included, etc...... HUGE for our housing market... Here is a good FAQ blog I came across describing
it. http://themortgagereports.com/259/harp-making-home-affordable-guidelines
Thank you for the info!
Photo taken at 16 months old