Refinancing and PMI

[Anne1208]

My husband and I will try to get preapproved at the beginning of January on a conventional 5% down loan.  We are not going to try FHA as our purchase price would be about $400k and that well exceeds our county's loan limits for FHA.

Anyway, he has a mid mortgage score right now of about 670-680 - he has fairly new creidt hes been building plus three paid collections from 2009/2010 and a couple lae payments from 2009 (it was a rough year for him as was for a lot of people). Around July 2017 the collections will all be off. three paid medical collections will fall off his report - he has zero debt right now so I will guess by late 2017 his mortgage scores will be at least 800.  If we paid up front PMI in a lump sum and got a mortgage now with his 670-680 score, and we wanted to refinance in a couple years (assuming we could get a better rate with his better score in two years - who knows what rates will do)....do we "lose" the PMI premium we paid for??  Or is that separate from the mortgage?  We will still be under 20% in a couple years likely so I want to make sure if we spend the cash to pay it all up front, we wouldnt lose that through a refinance.  We plan to stay in the house long term.

Thanks!

[Anonymous]

The PMI and terms/payments related to PMI are attached to the mortgage. If you refinance (read: get a new mortgage) the PMI paid in advance on the old mortgage will not apply to the new.

What is the single-payment PMI amount and what would it be if paid each month? Based on that you can calculate out when the monthly payments will equal the amount of the single-payment. For example if the single-payment is $5000 and the monthly payment is $50 it would be even after 100 months. If you refinance before 100 months you will end up paying more with the single-payment. If you refinance after 100 months the single-payment will cost you less.

[Anne1208]

Thank you! this is helpful

[Anonymous]

If you plan on refinancing in the near future, I'd go with the monthly PMI option (for a conventional loan). For FHA, you get part of the UFMIP back if you refinance into another FHA loan within 36 months. You do not get a refund if you refinance from an FHA loan into another loan type nor do you get a refund if you paid up-front PMI on a conventional loan and are refinancing.