.

[cstrunk]

Not to get too nosy, but what was your LTV percentage when you first took out the loan?

97% (first time homebuyer). I didn't have much to put on it and didn't feel like withdrawing from my 401k. I was just tired of living in an apartment. Sorry CF for not paying for it all in cash!

With the current balance and estimated current value it's probably around 85%. I need it to be below 80% to drop PMI (but would have to have a new appraisal to factor in the updated value). Otherwise it's at about 90% based on the original loan.

 

[BCClone]

Maybe... but I haven't looked into that as closely. I'm also not sure how long I will stay in this house. If I didn't have some other debt I was trying to pay down (student loans, new HVAC system, etc.), I'm sure I could. But I also like the greater flexibility with lower monthly payments of a 30-year note in case of financial hardship down the line.

If you were close to 80% LTV, another appraisal may be best. If your house appreciated to get 20% equity, it would drop the PMI. It is a $400 (approximately) gamble you are taking because you could come in at 82% and still be hosed.

 

[mynameisjonas]

The interest rate for a 30-year refi was 3% and they said they could drop my PMI. This was a couple months ago. I'm at 4.25% now and I pay $120/mo PMI. But my new payments didn't drop as much as I thought they would which made me hesitant. I need to look into it again.

If you plan to live in the house for a while I would highly recommend that you re-look at the situation. Going down to 3% or lower and removing $120 per month in PMI should see a significant reduction in payments. Enough to possibly make up the costs of your refinance in less than one year. Or you could keep the payments the same and reduce the term of your mortgage Depending on your situation what the ultimate goals are whether it’s lower payments or principal reduction. I‘m a payoff your debt guy and would encourage people to go with the 15 year if they can swing It. But it’s not for everyone.

Also if the bank said your payments wouldn’t come down much try a different bank, since I can’t imagine how that would be true refinancing to a lower rate plus removing $120 in PMI. Maybe you were talking to an incompetent lender.

I‘ll crunch the numbers for you if you want feel free to PM.

 

[cyphoon]

97% (first time homebuyer)....Otherwise it's at about 90% based on the original loan.

I plugged your numbers into a refi google sheet that I have. Assuming your original loan was around $194k on a $200k house, with a given PMI of $125 and an escrow estimate of say $300 since you didn't mention that:

Current loan:
-------------------------------------------------------
PMI : $125
Escrow : $300
Principal + interest : $954
Total monthly payment : $1379


If you have a loan balance of $180k, the refi numbers look like this at 3.0%. Assuming $2700 of closing costs baked into the loan:

Refi loan:
-------------------------------------------------------
PMI: $125
Escrow: $300
Principal + interest : $771
Total monthly payment : $1196

Savings per month: $180
Time to recoup closing costs: 15.5 months
Total savings over life of loan: $14288

That last number is skewed because I assume the PMI lasts for the entire life of the loan. That usually isn't true. Refinancing resets the PMI clock back to 30 years, so that assumption in my spreadsheet costs you almost $6000 in extra PMI costs.

If you can get them to drop it at some point, your total savings will fall somewhere between $14k and $20k. I assumed no extra principal payments for this. The spreadsheet allows for it though. lmk if you want me to share it.

fwiw, a 15 year refi would save you north of $100k in interest.

H

 

[cyphoon]

I need it to be below 80% to drop PMI (but would have to have a new appraisal to factor in the updated value).

Also beware that the PMI drop point is often 25% on a refi instead of 20% for many lenders.

H

 

[clone52]

can you get behind a 15 year note? With PMI savings, bigger interest savings... payments with a 15 year may be only a bit more than you currently pay.

I'm all for stretching mine out back to 30 year. At these rates, I can get a better return investing.

 

[mynameisjonas]

I'm all for stretching mine out back to 30 year. At these rates, I can get a better return investing.

this is a total legit thing to do. I hear people say that all the time. I often wonder if people do in fact take the difference in payment between the 30 and 15 year loan and add that to what they already contribute to their investment on a monthly basis. I’m guessing most don’t. (Not directed at you I’m talking people in general)

 

[BCClone]

this is a total legit thing to do. I hear people say that all the time. I often wonder if people do in fact take the difference in payment between the 30 and 15 year loan and add that to what they already contribute to their investment on a monthly basis. I’m guessing most don’t. (Not directed at you I’m talking people in general)

I would, but haven’t/won’t because after a certain period of time, you just get sick of that monthly payment. Like being married to it.

 

[keepngoal]

I'm all for stretching mine out back to 30 year. At these rates, I can get a better return investing.

Im not so sure about that. you have 15 years to make up that savings, cause at the start of year 16 you have your entire P&I every month in your bank account.

If you can save ~$730 by going with the 30 year, you need to make 7% on your money during years 1 through 15 to come close to the savings 'earned' by a smaller payment. And again, that is before you calculate the cash on hand that starts in year 16. (used 2.85% and 2.35% on $300k). If you can afford the 15 year, go that route. If you can promise yourself to make >7% on your savings while paying that investment monthly for 15 years, go that route.

 

[cstrunk]

Where? I just locked in at 2.625% on a 30 year.

Not that there is much difference in the long run, $13k over the 30 years...

On a refinance? Who was the lender?

Make sure when looking online at rates that you are looking at the refi rate and not purchase rate as the spread can be considerable depending on the bank.

Where's a good place to look for the lowest 30 year refinance rates??

 

[CycloneDaddy]

On a refinance? Who was the lender?



Where's a good place to look for the lowest 30 year refinance rates??

I would check with your local credit unions (gag) websites or your bank.

 

[CascadeClone]

On a refinance? Who was the lender?



Where's a good place to look for the lowest 30 year refinance rates??

Its a purchase actually. CRBT

 

[mynameisjonas]

On a refinance? Who was the lender?



Where's a good place to look for the lowest 30 year refinance rates??

Get a recommendation from friends , family, realtors for lenders in your local area. I would avoid using the online mortgage companies Like rocket and quicken, they are terrible. Realtors usually have good connections to solid lenders and are always happy to refer. I would call 3-5 lenders to get a good idea of rates and costs, and then narrow it down.

 

[cyphoon]

I have a google spreadsheet that can [do amazing things]

Refi-analysis - public

Sheet1 Use File-Make a Copy if you want to enter your own loan scenario Current primary mortgage Original primary mortgage amount,$175,000.00,<< Fill in the values in column B that have a green background. Values with a white background are calculated for you. Outstanding primary mortgage balanc...

docs.google.com

For anyone that has used this, I updated it to correctly account for PMI getting cancelled once you build up 20% equity. Originally I assumed it went on forever. The 20% number is configurable.

I think you have to use the "Make a Copy" feature again to pick up the change.

H

 

[mynameisjonas]

For anyone that has used this, I updated it to correctly account for PMI getting cancelled once you build up 20% equity. Originally I assumed it went on forever. The 20% number is configurable.

I think you have to use the "Make a Copy" feature again to pick up the change.

H

Most banks don’t drop the PMI on an existing mortgage with PMI until you hit 75% LTV. I assume this is done to account for the rare scenario where the value of the house goes down. It’s kind of a shady move by banks, IMO.

On the other hand, for those that don’t want to refinance and think the value of their house went up, in some cases you may be able to remove PMI by contacting the mortgage company and request an updated appraisal. Borrower would incur all fees, and usually it has to be at least 2 years after the origination of the loan.