About Government Refinance and Home Purchase Programs

Information and Updates on Government Mortgage Programs

If your down payment was less than 20% of the purchase price when you bought your home, odds are you are paying a monthly mortgage insurance fee (sometimes called “private mortgage insurance” or PMI). Mortgage insurance is insurance designed to protect lenders against the risk of borrowers defaulting on loans.

As anyone paying mortgage insurance knows, it can be expensive and burdensome. But there is good news: Over the last year housing values all across the U.S. have been increasing. That means that many homeowners who are paying mortgage insurance now may have enough equity to refinance to a new, improved mortgage with no, or lower, mortgage insurance.

Is a refinance needed to get rid of PMI?

The answer is: It depends. If you are in an FHA or USDA loan now you normally need to refinance to a conventional Fannie/Freddie loan to get rid of PMI.

If you have a conventional loan now and have more than 20% equity, a refinance often is your best bet if you’d like to improve your interest rate or get cash out in addition to removing PMI. If you have more than 20% equity and don’t need cash out and can’t get a better interest rate you can usually contact your current lender to see what it will take to remove your mortgage insurance without a refi.

(There is also a way to refinance to get rid of PMI if you just have 10% equity by refinancing to an 80% first mortgage with no PMI and getting a 10% second mortgage behind it. Contact us to learn more about that option.)

If you have mortgage insurance on your current mortgage get in touch with us by filling in the contact form in the sidebar. We can help point you in the right direction to reduce or remove that mortgage insurance and refinance to a better loan.

Comments (0) Posted on 31 Dec