Refinance for PMI removal?

[Anonymous]

A little back story:

Purchased the house almost 3 years ago and it's value has gone up thanks to the market and my area. Original loan amount was $160k, I owe $152k. Value estimates range between $195 and $230k. I am paying a little over $2k a year in PMI and am trying to figure out how to get rid of this. I've read that you can ask for an appraisal and if your LTV is 79-80% then they can remove it. I reached out to my mortgage company to see what the options were in eventually moving to have PMI removed. This was their response:

"Cancellation of the monthly premium is available only to loans that have a loan closing date after December 31, 2000 and a case number assignment date before June 3, 2013. For mortgages with an FHA case number assignment date on or after June 3, 2013, that had an original LTV greater than 90%, the FHA insurance can only be terminated by the servicer if the mortgage is paid in full before the maturity date. Your original LTV was greater than 90% and the case number on your loan was assigned on 10/22/2013; therefore, you do not qualify for cancellation."

I have a discharged Chapter 7 from Jan 2015. I don't think refinancing is even an option until next year. Any advice?

[Anonymous]

That is sort of weird, since after the 80% you should be able to request PMI removal. You could call around and speak with some mortgage brokers in your area and see if any of them have any advice, possibly even call Quicken Loans and ask them. If you refinance though I would make sure to ask if the closing costs can be included in the loan or if they are requiring you to pay those at closing. Another thing to think of is if you aren't going to stay in your home for another 5+ years it really isn't worth refinancing since the closing costs will be mroe than the PMI you're currently paying.

[Scupra]

PMI/MIP has changed a bit. What they are telling you is correct unfortunately.

[aussiesareforever]

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@Scupra wrote:

PMI/MIP has changed a bit. What they are telling you is correct unfortunately.

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Scupra is correct. After June 3rd 2013, PMI for FHA loans remain for the life of the loan. The only way to get rid of it is to refinance to a conventional loan. I believe (not sure) you have to be 4 years out of BK to get a conventional loan. Look on the mortgage boards to confirm.

[aussiesareforever]

Just looked it up and it is indeed 2 years. Just hang in there a few months longer

[Anonymous]

FHA loans are 2 years post discharge if your mortgage was not included in the bankruptcy. Unless you put down 10% of the loan, it is for the life of the loan. With 10% down PMI can be cancelled at the 11 year mark.

Conventional is 4 years post discharge if your mortgage was not included. Interest rates are often higher with this type of loan and very score sensitive. You have to work the numbers because a lower rate with PMI might save you overall depending on how long you want to stay in your house.

Unfortunately, the only way to get the current PMI waived is to wait until you can refinance into a conventional loan. That will be at the 4 year mark.

You can check at the two year mark to see if you qualify for a lower interest rate and possibly lower your current PMI through a refinance. The loan will still have to be FHA in that scenario and you're still stuck with PMI for at least 11 years.