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Home › Forums › Financial Markets/Economics › Refinancing to a rate below 5% without 20% equity…

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  • December 30, 2008 at 11:24 AM #14714
    HLS
    Participant

    I have had several conversations recently with folks who are confused about their options, and CAN get into a better situation, but don’t realize it.

    With less than 20% equity, mortgage insurance is required.

    If you have a 6%+ rate right now, and only have 10% equity, you may still be able to refinance into a lower rate with mortgage insurance, and have your payment be equal to or lower than it is now.

    The point is that mortgage insurance is not forever, but the lower interest rate is.

    When the loan balance gets down to 78% of the current appraised value, mortgage insurance will be removed, leaving you with a lower fixed rate payment.

    FNMA Mortgage insurance is priced in 5% increments..
    80.01-85%… 85.01-90%…90.01-95%..
    The higher your equity, the lower the insurance premium. 95% loans are still available to some.

    With 10% equity, mortg ins on a $400K loan is about $200 a month. with 15% equity it’s about $150 a month.. It is currently tax deductible for most people. (There is an income limit)

    Per the current guidelines, even if you have no equity in the future, mortgage insurance will automatically get removed when loan hits 78%.

    If future home values continue to decline, there may not be any options to refi if there is no equity.

    Let me know if you have any questions..Rates are still below 5%…. HLS

    December 31, 2008 at 3:19 PM #322046
    fm
    Participant

    Hi HLS,

    So a question here. If the equity is less than 80%, does that require an impound escrow account for taxes and insurance with most loans?

    Thanks

    December 31, 2008 at 3:19 PM #322548
    fm
    Participant

    Hi HLS,

    So a question here. If the equity is less than 80%, does that require an impound escrow account for taxes and insurance with most loans?

    Thanks

    December 31, 2008 at 3:19 PM #322391
    fm
    Participant

    Hi HLS,

    So a question here. If the equity is less than 80%, does that require an impound escrow account for taxes and insurance with most loans?

    Thanks

    December 31, 2008 at 3:19 PM #322450
    fm
    Participant

    Hi HLS,

    So a question here. If the equity is less than 80%, does that require an impound escrow account for taxes and insurance with most loans?

    Thanks

    December 31, 2008 at 3:19 PM #322468
    fm
    Participant

    Hi HLS,

    So a question here. If the equity is less than 80%, does that require an impound escrow account for taxes and insurance with most loans?

    Thanks

    December 31, 2008 at 3:57 PM #322076
    HLS
    Participant

    I assume you mean with less than 20% equity and a loan amount above 80%…..

    Some lenders charge an extra .25% at origination if you don’t want an impound account. I don’t.

    Up to 90%, I have options with better rates and no extra charge to waive an impound account.

    Above 90.01%, I think that impound account may be mandatory per mortgage insurance requirements… HLS

    December 31, 2008 at 3:57 PM #322577
    HLS
    Participant

    I assume you mean with less than 20% equity and a loan amount above 80%…..

    Some lenders charge an extra .25% at origination if you don’t want an impound account. I don’t.

    Up to 90%, I have options with better rates and no extra charge to waive an impound account.

    Above 90.01%, I think that impound account may be mandatory per mortgage insurance requirements… HLS

    December 31, 2008 at 3:57 PM #322497
    HLS
    Participant

    I assume you mean with less than 20% equity and a loan amount above 80%…..

    Some lenders charge an extra .25% at origination if you don’t want an impound account. I don’t.

    Up to 90%, I have options with better rates and no extra charge to waive an impound account.

    Above 90.01%, I think that impound account may be mandatory per mortgage insurance requirements… HLS

    December 31, 2008 at 3:57 PM #322421
    HLS
    Participant

    I assume you mean with less than 20% equity and a loan amount above 80%…..

    Some lenders charge an extra .25% at origination if you don’t want an impound account. I don’t.

    Up to 90%, I have options with better rates and no extra charge to waive an impound account.

    Above 90.01%, I think that impound account may be mandatory per mortgage insurance requirements… HLS

    December 31, 2008 at 3:57 PM #322480
    HLS
    Participant

    I assume you mean with less than 20% equity and a loan amount above 80%…..

    Some lenders charge an extra .25% at origination if you don’t want an impound account. I don’t.

    Up to 90%, I have options with better rates and no extra charge to waive an impound account.

    Above 90.01%, I think that impound account may be mandatory per mortgage insurance requirements… HLS

    December 31, 2008 at 9:42 PM #322672
    j
    Participant

    Just go FHA, because there is no PMI required.

    Remember mortgage brokers are only out for the commission, and they are not not any kind of advisor. Most don’t have any kind of degree, let alone a degree in finance or accounting. Beware the mortgage broker!

    Look at all the people that listened to their mortgage brokers over the last five years.

    December 31, 2008 at 9:42 PM #322592
    j
    Participant

    Just go FHA, because there is no PMI required.

    Remember mortgage brokers are only out for the commission, and they are not not any kind of advisor. Most don’t have any kind of degree, let alone a degree in finance or accounting. Beware the mortgage broker!

    Look at all the people that listened to their mortgage brokers over the last five years.

    December 31, 2008 at 9:42 PM #322575
    j
    Participant

    Just go FHA, because there is no PMI required.

    Remember mortgage brokers are only out for the commission, and they are not not any kind of advisor. Most don’t have any kind of degree, let alone a degree in finance or accounting. Beware the mortgage broker!

    Look at all the people that listened to their mortgage brokers over the last five years.

    December 31, 2008 at 9:42 PM #322516
    j
    Participant

    Just go FHA, because there is no PMI required.

    Remember mortgage brokers are only out for the commission, and they are not not any kind of advisor. Most don’t have any kind of degree, let alone a degree in finance or accounting. Beware the mortgage broker!

    Look at all the people that listened to their mortgage brokers over the last five years.

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