Problems with getting a mortgage refi to remove MIP (Mortgage Insurance)

[Anonymous]

I currently have an FHA mortgage with an additional Mortgage Insurance Premium (MIP) on it each month. I took out the mortgage in late 2016, and at the time was only a few years out of a Chapter 7 bankruptcy. From what I recall, in order for me to be included on the mortgage and the deed (and be able to get it), I had to take out the mortgage with my parents and put down 20% and have MIP as part of the mortgage.

In hindsight, I probably should have waited a few more years. I'm trying to figure out a way to refi right now in order to at least get rid of the MIP. I'm almost at 7 years from when the Ch. 7 bankruptcy was discharged, but my big problems at this point are that I'm self-employed and don't show a lot of income (I'm able to deduct a lot) and my parents are both retired now and don't show much income either.

My credit score is very good (in the 730's), I've never missed a payment on the mortgage, and I've been in business for myself for 11 years - but I think the big problem is the debt-to-income ratio. We've talked to the mortgage broker that helped us a few years ago but he says at this point there's nothing we can do (even with my parents on the refi again).

It's not the end of the world if I'm stuck with the MIP, but I'd like to save some money considering what's going on with the economy and saving money at this point is probably a good thing.

Anyone have any ideas or suggestions? Are there any non-conventional routes I can take?

Thanks!

[NC_Mtg_Loaner]

Until you are 7 years and one day past your CH 7 BK discharge, you are not eligible for a conventional loan.   

However, you might be eligible for an FHA Streamline Refi which can reduce your interest rate if you have a higher one and will also provide a bit of relief since your principle balance may be lower since you've paid some of the loan balance down. 

Of course you won't save more than 5-10% but that still depends on the rate and loan balance, but it's better than nothing if you don't want to wait or won't qualify for a conventional loan when that time comes.   

[Anonymous]

I'm pretty sure it's 4 years after Ch. 7 discharge date for a conventional loan (https://www.experian.com/blogs/ask-experian/can-i-get-a-mortgage-after-bankruptcy/).

But regardless - I'll be at 7 years very soon - it doesn't make a difference given my circumstances...  That's why I'm looking for alternative options.  Saving a bit with a streamline FHA refi doesn't seem like it's worth it - I basically want to get rid of the MIP, not lower the monthly payments only slighty and still have to pay refi costs.

[NC_Mtg_Loaner]

I stand corrected on the BK waiting period--it is 4 years and one day.  The 7 year waiting period is for a foreclosure; my apology.

Assuming you can't qualify for a conventional loan in order to remove PMI the FHA Streamline is certainly the next best thing. 

The only 'true' cost is the amount of HUD's UFMIP that's expired from your original loan amount and any title fees or legal costs to conduct the transaction, but in this market (and assuming you have great credit score) those costs can be recouped in a year or so if they aren't paid by the lender themself in the form of lender credit.   Naturally the FHA Streamline restricts your cash back amount to be no > $500 and depending upon the timing, you are able to skip a couple months' payments before your new payment is due.    

While monthly PMI seems to be a large payment amount--don't forget that it's only assesed at .8% of the annual loan balance.  So from a financial opportunity cost standpoint, you are likely to be able to generate a larger ROI elsewhere in today's world depending upon your appetite for risk.

[Anonymous]

I've contacted my mortgage company about the FHA Streamline Refi, but I'm not sure about a few things you wrote:

What did you mean by "The only 'true' cost is the amount of HUD's UFMIP that's expired from your original loan amount" ?

Also, what did you mean by "Naturally the FHA Streamline restricts your cash back amount to be no > $500"? - I don't want to take any cash back I don't think - I just want to lower the monthly payments

Thanks.