home loan rejected.
Question: So in 3 years your equity is well over the minimum needed to drop PMI if you >had it. If you had put 10% down and taken PMI, today you could drop it. >And in the meantime you’d have a lower interest rate on that 10%. Was it >worth it – once you refinance, woud it have been cheaper overall just to >have paid the PMI for 2 or 3 years? Would you recommend going the 80/10/10 >route? Would you do it again?
>This kind of arrangement wasn’t available when I bought my house, so I know >nothing about how it works.
Answer: I never compared it. The interest on the 2nd was higher, only a few percent, and it was on a much smaller amount. It was also deductible, which saved me quite a bit on taxes. I probably could have dropped the PMI in a year with how much my house appreciated, so maybe it would have been a good decision.
The other reason I went with the 80/10/10 that made it *really* worth it for me was that the 80% I financed was the maximum amount you could finance without getting a jumbo loan. The 90% jumbo would have given us a much higher rate, just because it was a jumbo.
So, in my situation, I would do it again, although I made a mistake in not doing something about the second earlier. I could have taken out a home equity loan 2 years ago at a much lower variable rate and paid it off. But then again, I didn’t know that rates would stay down for so long.
I don’t know if it’s right for other people. It is a neat option though.
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