Consumption and Real Estate
Refinancing a home loan do I need to put 20% down again?
Question : Refinancing a home loan do I need to put 20% down again?
With all the mortgage rates dropping, I’m considering refinancing my home loan. Do I have to put a 20% down payment again to avoid PMI even for a refinance? My concern is that if my montly payments get lower, but now I will have to pay PMI, it might be more feasible for me to just not refinance, since it nets out to the same, and I don’t plan on living at my current home for 3 more years.
home loan refinancing
Best answer:
Answer by David Z
you will need pmi if you do not have 20% down.
for only 3 years the cost to refi is not worth the savings.
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#4 written by golferwhoworks 1 year ago
if you already have no pmi then you in most cases still wont. Now refinancing the home knowing that you will not stay 3 years may be a stupid idea as you probably will not recover the actual cost of this transaction in 3 years unless you are able to drop more than 4% from your current rate. There is no free loan. There is cost that must be paid or they are placed back into the loan plain and simple,
I am a mortgage banker in TN -
#5 written by Attorney 1 year ago
It depends upon the current appraised value of your home.
If your refinance is for less than 80% of the current appraisal you probably will not need to pay PMI or to put any $ $ up to avoid PMI.
As for the advisability of refinancing if you are only going to live there for 3 years.. take into account the costs involved in refinancing.
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#6 written by Lauren F 1 year ago
If you have 20% equity in your home (meaning the amount you will need at refinance is less than 80% of your home’s value) you will not need to pay PMI. So, it really comes down to your house’s appraised value. If it is appraised at $ 200,000, the most you can borrow without PMI is 80% of that, or $ 160,000.
One thing to consider, though, if you plan to move out within 3 years is that it might cost you more to do the refinancing than you will save. A typical refi closing costs about 4% of the house’s value. If you only save 1% interest rate, you will not be there long enough to recoup the cost of refinancing. Typically you need at least 5 years to recoup refinancing costs.
If you are considering this, ask your bank if they will do a streamlined refinance for less costs. If they say no, then you have to do the tradeoff of how much you will save per month vs the cost to get a new loan.
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