Refinancing current mortgage-options?

Question

I currently have my own residence with a 5.25% fixed interest rate with excellent credit that I have lived in for 2 years.  I am planning on living in the home for another 3-4 years.

I looked into refinancing my loan to take advantage of the low 4% rates currently available, but was told there would be no savings because FHA loans have increased their mortgage insurance premiums by nearly 100%...

Are there lenders out there that do not require mortgage insurance?  Are there lenders out there that do not charge mortgage origination fees to assume my existing loan?  Would a smaller, local bank be my best bet?

I recently have done a complete kitchen and living room remodel and imagine my property values have increased a little bit accordingly.  If i can get a new appraisal that shows I have more than 20% equity in my home based on my current loan balance would a lender waive the mortgage insurance?

Just curious...

Joe Harper · Answer

I am dealing with a similar situation except I don't have 20% equity.

The answer to your question is if you can get an appraisal to show 20% equity then there would be no mortgage insurance required. "Waiver" would not be the term, exempt would be better way to say it.

I'm at 6.5% and can get 4 3/8 % with lender subsidized closing costs meaning the rate is higher to reflect 'reverse points'. The HSH calculator is an excellent tool for visualizing the nuances.

http://www.hsh.com/refinance-calculator (keep scrolling!)

If you have 20% equity then you have a straight conventional refi and no mortgage insurance is required. The lenders differentiate between PMI and MI. PMI is Private Mortgage Insurance and applies to Conventional loans only (Fannie and Freddie).  MI applies to FHA and VA loans only.

It sounds like maybe the person you asked jumped to some conclusions about your situation, or that your existing and proposed rate with reverse points are too close together resulting in a negligible PITI and MI reduction.