March 3rd, 2010 4:02 PM by BILL WILBANKS
So you'd like to take advantage of these historic rates, but you believe your home value has dropped and are concerned about being forced to take Private Mortgage Insurance on a new conventional loan or Mortgage Insurance on an FHA loan. Not to mention whether you have enough equity to finance the costs of closing. In either case you've convinced yourself you'd rather stick with that 6%+ rate (over 35% of home mortgages are said to still be at over that rate level) because of it. Well...
When you Refinance your current mortgage...
The appraisal that is completed on the new loan will establish the value at that time and the new mortgage amount will determine whether or not your new loan exceeds 80% financing. Exceeding 80% is the trigger that would require PMI again generally speaking. If it's 80% LTV or below on your owner-occupied or second home you are in the clear. Losing the PMI portion of the old payment could be another advantage of refinancing the current loan.
There is an alternative available called the Home Affordable Refinance Program also known as "HARP", available to current Fannie and Freddie held mortgage borrowers and the availabilty of that Federal program has just been extended to loans funded no later than June 30, 2011. Most lenders allow up to 105% of the appraised value today without PMI, though the program authorizes up to 125%. This makes refinancing possible today for many that would otherwise not be eligible on a standard conventional basis with or without PMI and without MI on an FHA loan. You can see all the details by clicking on this link to HARP ELIGIBILTY .
Or contact me for personal assistance with your questions.