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Info on paying PMI up front

I've read articles about buying out PMI or paying PMI up front but haven't talked to a lender that actually offers this program. A few months ago I was interested in doing a [url=http://www.mortgagefit.com/refinance.html]refinance[/url] on our mortgages and taking some cash out, we originally did an 80/15/5 loan. The 80% was on 30 year fixed and the 15% was on a 15 year fixed, which helped to avoid PMI. I was interested in doing one loan and paying PMI with a 20 year or 25 year fixed loan.

Guess what I'm asking is exactly how does the PMI buyout work? Is the amount based on a percentage of the loan? I assume it also matters what the Loan To Value amount is as well? Does a shorter term lower PMI or does it make it a higher risk loan and actually raise PMI. What lenders offer this type of program?

Thanks for your answers.

jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello Dcrum,

PMI buyout helps you to eliminate PMI either by paying an upfront PMI buyout fee or getting a slightly higher interest rate. The increase in the rate depends upon the amount you put as down payment or equity but it mostly increases by .2% to .35%.

Like | Dislike | Share | Posted: Thu, 02/04/2016 - 23:55 | Post subject:

larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Dcrum,

If you go for the PMI buyout then you may have to pay a bit higher interest rates. Are you planning to stay in the home long enough? Then I think it is better to go with PMI as you may be able to remove the PMI after couple of years.

Do you have 20% equity? If so then you can refinance without paying PMI.

Feel free to ask if you have any further questions.

Best of luck,
Larry

Like | Dislike | Share | Posted: Thu, 02/04/2016 - 23:55 | Post subject:

dcrum0's picture
dcrum0 | Joined: February 18, 2008 07:06 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

I plan to stay in the house at least 5 more years. The house is appraised at $235k and we owe about $202k so we have about 14% equity. Would need $14k down to get 20%, plus closing costs. Can't do it right now and I think PMI just increased with all the housing problems.

Since I would need about $20k to pay toward the loan to avoid PMI, I think I might come out better paying the $20k down on the smaller home loan and focus on paying it off?

Like | Dislike | Share | Posted: Thu, 02/04/2016 - 23:55 | Post subject:

jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi dcrum,

What I can say here is, yours is a good decision to build up 20% equity fast so that you can eliminate PMI. And, then focus on paying off the 2 loans. But don't stop paying for one just to continue paying off the other. Better make both payments in time.

Let me know your thoughts on this.

Thanks,

Jerry

Like | Dislike | Share | Posted: Thu, 02/04/2016 - 23:55 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Our son, first time home buyer - FHA loan with less than 20% down - actually closer to 2.5%
How is the amount of the PMI upfront figured? He was asked to pay 4672.50 on a 316,000.00 loan.

Like | Dislike | Share | Posted: Thu, 02/04/2016 - 23:55 | Post subject:

sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi granny,

A similar query has been replied at http://www.mortgagefit.com/homeloan/upfront-pmi.html#60851 . Please have a look at it.

Take care

Like | Dislike | Share | Posted: Thu, 02/04/2016 - 23:55 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am using the no PMI option exclusely now. It doesnt make sense to pay it when home prices are not going up in the forseable future.

It is not a higher reat with our company either, we portfolio the loan.

[color=Red:08cc69fe4c][size=9:08cc69fe4c][Phone Number Deleted as per the forum Rules. Thanks][/size:08cc69fe4c][size=7:08cc69fe4c][/size:08cc69fe4c][/color:08cc69fe4c]

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