Refinancing on Personal Home

[Karson Wilson]

My wife and I just bought a house a few months ago (November 2020) for approximately $293K and now Zillow has it as an estimated $338K. Would it be wise to try and refinance to save money and stop paying mortgage insurance? We are paying around $1,750 for our mortgage now. Our goal is in the next few years to move and rent it out. Per Zillow estimate it would rent for around $1,700 a month. 

When refinancing would our new loan be for $338K or how does that work when refinancing? And where would that additional $45K of equity go? 

[Brad Hammond]

Hey @Karson Wilson, I think it would be worth refinancing to get out of paying the PMI. That will save you a few hundred dollars per month. Even if your new payment is around the same amount at least you will have more going to principle and interest instead of the lender's pockets.

I would structure your refinance around your needs. If you want your monthly payment to be $X, you would take out whatever is leftover from that. If you want $X in cash, you would structure it around that. In order to get rid of PMI you are going to need to leave in 20% equity in the home so make sure you account for that in your calculations.