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Lancaster Realty - Refinance out of PMI & MI

A friend called us today and asked us to get some comps on her house.  She was seriously considering refinancing and wanted to know if she might have enough equity in it in order to go from her current FHA loan to a conventional so she could stop paying for PMI and MI.   So, while we pulled the comparables I wondered if it was even possible as she had only closed escrow on this house 3 months ago.  I called our friend Ken Yoder over at Performance Mortgage to ask him how that could work out.  He answered my question, “What benefits are there from refinancing a FHA loan to a Conventional loan?” FHA loans have two mortgage insurances.  One is the upfront of 1.75% of the loan amount which is usually financed (put on the back end of the loan) and the other is the monthly of 1.35%.  If a homeowner has at least 20% equity, they may benefit to refinance and get rid of the monthly mortgage insurance.  They may even be entitled to a refund of a portion of the financed MIP. Getting together with an ethical and informative lender may help you to refinance and save money in the short run as well as the long run. Example : A client with a $300,000 loan amount would be paying $337.50 for the monthly mortgage insurance.  If the client has at least 20% equity, they could benefit from refinancing by getting rid of this mortgage insurance. Thanks Ken! Refinancing might not be the right solution if you are planning on selling in the near future.  If anyone out there is considering buying or selling a home or you know someone who is, please give us a call and we can help you find the right home! Thanks for reading my blog! Valerie