PMI Refinancing Advice
(Sharon, Pennsylvania USA)
Ask Kate: PMI Refinancing Advice Kate, I am looking for refinancing advice concerning my 30 year fixed rate mortgage at 6.125% originated in 2007. I have not paid a significant amount of principal because I only put down 3%. I was not required to pay PMI.
Would it benefit me to look into refinancing for a lower rate or would I have to pay PMI since I do not have more than 20% equity in the home?
Kate Answers: PMI Refinancing Advice
Hi Janet, Generally PMI, private mortgage insurance, allows home buyers to obtain mortgages with less than 20% down payments. You may have qualified under a special program offered in 2007 not requiring PMI.
Have you considered calling the same lender that helped you in 2007? Perhaps there are provisions under the same program for refinances.
Even if current mortgage interest rates are lower today than in 2007, you may find the benefits are canceled out by adding in PMI. To compare apples to apples, don't forget to add in property taxes and home owners insurance when comparing the proposed monthly house payment to your existing payment.
Also ask if paying a one time lump sum for PMI coverage could be financed and compare again to see if that lowers your monthly payment.
If your current mortgage is a Fannie Mae or Freddie Mac loan, ask if any provisions have been made to waive PMI in your situation.
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