Someone please answer this simple PMI question

[donthasslethehoff]

Does the amount of time you're paying PMI matter?

Example - I called mortgage company today to ask about refinancing. I've been in my house for 2.5 years. If I refinance, my PMI will go up a shitton, but the drop in interest rate will more than make up for that, making my overall mortgage payment go down about $250 per month.

It's an FHA loan, and from what I've read, PMI can be cancelled when you've reached the point of 22% equity. Does the amount of time you've paid PMI matter in any of this, or just that you reach 22% period.

[Deleted]

Our loan requires 5 years of PMI AND 22% LTV ratio.

[jene]

Our FHA Loan required 5 years of PMI. If we reached 22% LTV before that, we were told we would need to refinance and get a conventional loan

[donthasslethehoff]

Sept 27, 2012 15:50:22 GMT -5 jene said:

Our FHA Loan required 5 years of PMI. If we reached 22% LTV before that, we were told we would need to refinance and get a conventional loan

Got it. Is there anything I am not grasping here? Regardless of how long we've already been paying it, if our overall mortgage payment is going down, it's worth it to refinance, right?

I understand PMI is not tax deductible, whereas mortgage interest is, but other than that, is there anything I should be worrying about?

[Deleted]

We chose to refinance. Long term, it is better and our payment still went down.

[noodleoo]

We had an FHA loan and after 1 year we refinanced to a conventional loan to get rid of PMI. It was easy and worth it.

[jene]

Sept 27, 2012 15:55:17 GMT -5 donthasslethehoff said:

Sept 27, 2012 15:50:22 GMT -5 jene said:

Our FHA Loan required 5 years of PMI. If we reached 22% LTV before that, we were told we would need to refinance and get a conventional loan

Got it. Is there anything I am not grasping here? Regardless of how long we've already been paying it, if our overall mortgage payment is going down, it's worth it to refinance, right?

I understand PMI is not tax deductible, whereas mortgage interest is, but other than that, is there anything I should be worrying about?

I think it would be worth it, but we ended up selling a year after we bought to relocate for my job, so others may be able to answer that question more accurately than I can.

[magdala9]

Sept 27, 2012 15:42:15 GMT -5 donthasslethehoff said:

Does the amount of time you're paying PMI matter?

Example - I called mortgage company today to ask about refinancing. I've been in my house for 2.5 years. If I refinance, my PMI will go up a shitton, but the drop in interest rate will more than make up for that, making my overall mortgage payment go down about $250 per month.

It's an FHA loan, and from what I've read, PMI can be cancelled when you've reached the point of 22% equity. Does the amount of time you've paid PMI matter in any of this, or just that you reach 22% period.

You have to read the loan documents for your own loan. In general, PMI can be cancelled at 20% equity. In a market where house prices are declining, that becomes 20% of the current value because equity is based on value not loan amount. This is how people become upside down on their loans because the loan is greater than the current value of the house.

Some loans will have an "AND" clause where it is both 20% equity and a specific time period.

[donthasslethehoff]

Sept 27, 2012 16:08:39 GMT -5 magdala9 said:

Sept 27, 2012 15:42:15 GMT -5 donthasslethehoff said:

Does the amount of time you're paying PMI matter?

Example - I called mortgage company today to ask about refinancing. I've been in my house for 2.5 years. If I refinance, my PMI will go up a shitton, but the drop in interest rate will more than make up for that, making my overall mortgage payment go down about $250 per month.

It's an FHA loan, and from what I've read, PMI can be cancelled when you've reached the point of 22% equity. Does the amount of time you've paid PMI matter in any of this, or just that you reach 22% period.

You have to read the loan documents for your own loan. In general, PMI can be cancelled at 20% equity. In a market where house prices are declining, that becomes 20% of the current value because equity is based on value not loan amount. This is how people become upside down on their loans because the loan is greater than the current value of the house.

Some loans will have an "AND" clause where it is both 20% equity and a specific time period.

Original loan is an FHA loan, and we'd be doing an FHA streamline refi. FHAs say that you need to pay PMI for at least 60 months, and can be cancelled at 20%, but you have to call to get them cancelled so it's good to keep track.

I just feel like there's something I am missing here.

-House is worth $340K
-We owe $315K on it so basically we have about ~7ish% equity.
-We've lived in it for 2.5 years
-5.25% interest
-Pay $144 in PMI
-Current mortgage payment is $2415 (includes (high) taxes, PMI, homeowners insurance)

Refi would be:
-$315K
-3.375% interest rate
-PMI goes up to $332
-New payment would be $2191 (saving $224 per month)

[knitty]

Sept 27, 2012 15:55:17 GMT -5 donthasslethehoff said:

Sept 27, 2012 15:50:22 GMT -5 jene said:

Our FHA Loan required 5 years of PMI. If we reached 22% LTV before that, we were told we would need to refinance and get a conventional loan

Got it. Is there anything I am not grasping here? Regardless of how long we've already been paying it, if our overall mortgage payment is going down, it's worth it to refinance, right?

I understand PMI is not tax deductible, whereas mortgage interest is, but other than that, is there anything I should be worrying about?

Provided restarting the fve year clock is not a problem. You also roll some percentage of it into the loan, so it's paid regardless of any future refis, and it's not represented in those figures, I think.