Posted on: 13th Mar, 2010 07:39 am
hello all,
i purchased a home 1 year ago in the phoenix, az area. prices had dropped quite a bit and the market has been a bit more flat this last year although the home value has probably dropped a bit since we purchased for $210,000. we've got a 30yr, 5.5% fha loan. 3% down and mip of ~$92/mo.
i'm a huge saver so i invest or pay down debt whenever i have a chance. i'm also pretty comfortable with financial matters so feel free to give me the details if you've got some info for me. my goal has been to pay down the mortgage to the 78% mark so that i can drop the mip once 5 years have passed. i've been able to pay a little extra this year and i'm down to ~96% ltv assuming original value of 210k.
my question is, i haven't found a calculator that incorporates any savings of not having to pay a mip when considering a refinance. i want to confirm that i would be able to (assuming i have the cash to refi without needing mip) be able to refi without mip on the new loan and that there aren't penalties to pay off my existing loan that has mip? also, when considering my savings over the next few years, i could just include the ~$92/mo that i would be saving on the mip payment. correct?
thanks for any clarification you may provide!
i purchased a home 1 year ago in the phoenix, az area. prices had dropped quite a bit and the market has been a bit more flat this last year although the home value has probably dropped a bit since we purchased for $210,000. we've got a 30yr, 5.5% fha loan. 3% down and mip of ~$92/mo.
i'm a huge saver so i invest or pay down debt whenever i have a chance. i'm also pretty comfortable with financial matters so feel free to give me the details if you've got some info for me. my goal has been to pay down the mortgage to the 78% mark so that i can drop the mip once 5 years have passed. i've been able to pay a little extra this year and i'm down to ~96% ltv assuming original value of 210k.
my question is, i haven't found a calculator that incorporates any savings of not having to pay a mip when considering a refinance. i want to confirm that i would be able to (assuming i have the cash to refi without needing mip) be able to refi without mip on the new loan and that there aren't penalties to pay off my existing loan that has mip? also, when considering my savings over the next few years, i could just include the ~$92/mo that i would be saving on the mip payment. correct?
thanks for any clarification you may provide!
Hi actormw,
It's a good idea to make extra payments towards your debts to pay them off early. It saves a lot of money in interest. In case of a mortgage, the more quickly you pay down the principal amount and increase your equity in the property, the more faster you will be able to remove the mortgage insurance premium (MIP). However, for FHA loans you must pay the MIP for at least 5 years before you can cancel it.
Once you have paid the MIP for 5 years and you pay down the mortgage balance to the 78% LTV mark, you can cancel the MIP and use the savings to put down on the refinance loan. There's a Refinance Calculator in this site, which helps you determine how much you save if you refinance the mortgage at a lower rate.
It's a good idea to make extra payments towards your debts to pay them off early. It saves a lot of money in interest. In case of a mortgage, the more quickly you pay down the principal amount and increase your equity in the property, the more faster you will be able to remove the mortgage insurance premium (MIP). However, for FHA loans you must pay the MIP for at least 5 years before you can cancel it.
Once you have paid the MIP for 5 years and you pay down the mortgage balance to the 78% LTV mark, you can cancel the MIP and use the savings to put down on the refinance loan. There's a Refinance Calculator in this site, which helps you determine how much you save if you refinance the mortgage at a lower rate.
There is no penalty for refinancing to get rid of an FHA mortagge and the MIP that is associated with it. So, you can refinance whenever you can and there is no penalty, however, the new loan would be based on the appraised value at that time. If values have dropped, that means you need to pay down the balance more than nyou would with the FHA mortgage which is based on the original value or purchase price, whichever was less.
The FHA mortgage balance to determine if MIP is required is the base FHA mortgage amount, not the FHA mortgage amount including the Up Front Mortgage Insurance Premium.
The FHA mortgage balance to determine if MIP is required is the base FHA mortgage amount, not the FHA mortgage amount including the Up Front Mortgage Insurance Premium.
