Question about PMI

[movinonup79]

I just have a random question about PMI for an FHA loan - and getting rid of the monthly PMI.  I have my mortgage on biweekly payments and pay $300 extra per month, trying to build equity fast so I can buy a 2nd place next year when I move across the country.  I read something about doing a streamline refi and if you own 90% of your home you no longer have to pay the monthly PMI?

Any help would be much appreciated!

[GregB]

On a loan with less than 20% down, PMI is required. You can apply for PMI to be cancelled when the loan balance is down to 80% of the original purchase as long as you have not been late or have a second mortgage. It is also necessary that the value of the home has not gone down, which is a higher risk in this market. The lenders will cancel it on their own when it is paid down a bit further than than - I think 77% of original purchase price.

[movinonup79]

That's what I thought, but I read somewhere on another post about at 90% with a streamline refi you could eliminate the monthly pmi.  Regardless, if I did a streamline refi in a year or so (hopefully rates stay relatively low), and paid extra to the 80% of the home value, could I eliminate pmi on an fha loan?

Thanks!!

[Anonymous]

Unless the rules have changed, fha loans require you to pay their version of pmi (mi) for a minimum of 5 years even if you reached 78-80% loan to value mark before the 5 years are up.  The only way to not have to pay it is if you took out a 15 year fha

[movinonup79]

So I guess my best option to get rid of it is either keep paying extra on my principal to lower my payment or refi conventionally.  Just trying to plan accordingly!

[Lel]

As steelfan pointed out, if you can refinance into a 15 year FHA loan and have at least 10% equity, then you'd have to pay the upfront mortgage insurance premium but no monthly mortgage insurance premiums.

If you refinance into a 15 year FHA loan and have less than 10% equity, you'll have to pay monthly mortgage insurance until you reach 78% LTV (based on the original appraised value at the time the loan was originated), even if you have been paying monthly MIP for less than 5 years.

This is the way it was in the past - I don't know if these rules have changed along with the increased cost of MIP and the reduced seller's concessions.