Just heard and advertisement from a mortgage company, saying refinance with “them” to get rid of mortgage insurance if your home has increased in value. It made me think that I should add a few words to let my friends and clients know that refinancing isn’t always necessary.
Before you do that:
- On FHA Loans, that were closed before 2016, mortgage insurance (MIP) drops off when you reach 78% Loan to Value after 60 payments automatically. New loans that were closed on or after Jan 1, 2016 do not have the provision for the mortgage insurance to drop off.
- However, On Conventional, if your loan to value is under 80% you may be able to get your mortgage company to waive the mortgage insurance by producing current appraisal. This varies greatly from lender to lender. If your value has increase or you have paid additional principal payments. It is certainly worth a try. It might save you monthly on your mortgage.
- If you have 20% equity and still have mortgage insurance and see how much savings you will get on you mortgage payments, Keep in mind that extending the term of your mortgage may lower the payments but cost more in the long time. Try to get a similar term mortgage or have the loan officer give you figures that would pay off your new mortgage in the same amount of time as the old mortgage for a good comparison
I fact checked this with my favorite loan officer Ron Kuhn of Amerifirst Mortgage. I highly recommend him.
Posted on October 29, 2016 at 7:45 am by Pat Ford