Can refinance trigger PMI to be required?

Guest

We have owned our current home for 4 years and were not required to pay PMI due to the size of our downpayment. We are now considering refinancing for the first time. Our question -

Is it possible that we could be required to pay PMI on our new mortage if the house appraises for a significantly lower value during the refinace process?

Having to pay PMI would negate the value of refinacing, so it would help greatly to understand how such situations are handled.

jveenstra · Posted: Thu Oct 08, 2009 2:24 pm Post subject: Refinance

If your existing mortgage is owned by Fannie Mae or Freddie Mac you will not need PMI. The mortgage amount divided by the appraised value will need to be 105% or less, in some cases 125% or less.

If your present mortgage is not owned by Fannie Mae or Freddie Mac, you would need PMI and in some cases that may not be available anyway.

Call the 800 customer service number and ask them if your present mortgage is owned by Fannie Mae or Freddie Mac. If it is, you may discuss refinancing with that company--your present servicer of your mortgage--or you may speak with any mortgage originator.

You may not even need an appraisal at all.

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