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Refinance / Drop MIP question

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NuMelc
Valued Member

Refinance / Drop MIP question

I've been doing some research in regards to dropping MIP, but I still have some questions so hopefully someone here can help.

 

We got an FHA loan almost three years ago and are paying MIP. The original loan amount was 119. Currently the balance is 113. The tax appraisal for the property is 157. The loan has a 5% rate. Currently MIP is $108.37.

 

Now, my question is can we eliminate the MIP at this time either by refinancing or it dropping off?

 

Thank you in advance for any help.

Message 1 of 6
5 REPLIES 5
203bravo
Established Contributor

Re: Refinance / Drop MIP question

The tax appraisal cannot be used to determine current home value.. A new professional appraisal would have to be ordered.  That being said, the value of the property may still have increased enough to give you 20% equity and allow PMI to be dropped.  Since you have a FHA loan less than 5 years old you would need to refi in order to drop the MIP {new regulations carry MIP for the life of FHA loans.}  But with a refi you may be able to save even more $$ since you can probably get lower than 5% at this time.

Message 2 of 6
DallasLoanGuy
Super Contributor

Re: Refinance / Drop MIP question

fha mip is a minimum 5yrs.

you can look into conventional..... but only if you can lower rate some.... the mip savings will offset most of the closing costs so you will break even on the closing costs real soon

 

Retired Lender
Message 3 of 6
ShanetheMortgageMan
Super Contributor

Re: Refinance / Drop MIP question

+1 on looking into conventional, especially if your scores are at least 680.

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 4 of 6
NuMelc
Valued Member

Re: Refinance / Drop MIP question

Thanks for the info.

 

I'm going to look into refinancing more. Our scores are in the low 700s. Refinancing was actually what lead me to trying to find out if the MIP could be dropped. I wanted to look into it before rates in SC got back to 5% or higher. Hopefully we can get a little lower rate and refi without MIP...what kind of criteria other then credit score needs to be met to refi? What fees will need to be paid? How much would I need on hand to put towards a refi?

 

 

Message 5 of 6
ShanetheMortgageMan
Super Contributor

Re: Refinance / Drop MIP question

Need to have a qualifying debt ratio, in most situations the limit is no more than 45% total debt ratio. You shouldn't need any reserves unless you need to bring in money at closing, but it's a good idea to use reserves to qualify if you have them.

 

There are new closing costs for refinancing - lender underwriting fees, appraisal fee (most likely), title insurance, closing/escrow fee, recording fees, and if you want to continue paying your property taxes & homeowners insurance then you'll need to pre-fund a new escrow account for those items as well (you'll get a refund of your current escrow account balance within 30 days of them being paid off).  If you have 20% equity in SC then you have option of paying your taxes/insurance own their own, separate from your mortgage payment.


On a conventional refinance (not getting cash out) your loan amount can go up to 95% of your home's value, since it appears you have quite a bit of equity you can roll all of thsoe closing costs into the new mortgage.  However it'll really depend on what the appraised value comes in at & loan-to-value you don't want to exceed.

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 6 of 6
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