Refinancing Tips · March 24, 2025
How to Remove PMI Through Refinancing
FHA MIP that won't cancel, or conventional PMI taking too long? Refinancing may be your fastest path to PMI-free homeownership.
PMI provides no direct benefit to you — it protects the lender. Getting rid of it should be a priority.
The FHA MIP Problem
FHA MIP has a critical flaw: if you put less than 10% down on a 30-year FHA loan, MIP stays for the LIFE of the loan. It doesn't cancel at 80% LTV like conventional PMI.
The only way to eliminate FHA MIP without selling: refinance into a conventional loan with 20%+ equity.
The Math on FHA to Conventional
$300,000 FHA loan, annual MIP $1,650 ($137.50/month). Refinancing to conventional eliminates this cost. Even at a slightly higher rate, the MIP elimination frequently creates net savings.
Conventional PMI: Faster Options Without Refinancing
- Wait: Automatic cancellation at 78% LTV
- Request cancellation: At 80% LTV with written request
- New appraisal: If home values rose, a new appraisal may show you're already at 80%
The Appreciation Strategy
Bought at $300,000 with 5% down. Current balance $265,000. Home now worth $380,000. LTV = 69.7% — no PMI on a conventional refinance. The appreciation effectively solved the problem.
When to Time the Move
Optimal: conventional rates within 0.75% of your current FHA rate AND you have 20%+ equity.
HMS runs this analysis for every FHA borrower. Call 309-222-8286.