“Refinancing and Stop Paying Mortgage Insurance”

It is hard to understand why some keep paying mortgage insurance when they don’t need to, especially FHA mortgages. A while ago FHA changed their guidelines so that with the minimum down payment at the time of the purchase the mortgage insurance stays on for the life of the mortgage, no matter how much equity there is.

The biggest opportunity is loans that were done as FHA 203 K loans which involved renovations. Many of these properties were purchased below real value because of the renovation work that we needed. Once the work was completed often the values increase and sometime more than enough to eliminate mortgage insurance.

Gerard and Stephanie purchased their home for $116,000 and had $31,000 worth of renovations. At the time of the original mortgage  the appraisal after renovations showed the value at $165,400. They called and asked if it was possible to refinance and eliminate the mortgage insurance. I told them I would communicate back with them.

I contacted an appraiser that was familiar with the area to do a comp check for me. She called me back letting me know the value would come in between $185,000 and $190,000.

I let them know the information and we moved forward. They will end up saving nearly $200 per month, so definitely worth getting the refinance done.