Answer

I have a thirty-year, adjustable-rate mortgage on my condominium, which increased to 9.00% in November of 2000. This is my primary residence. I only owe $35,000 on the mortgage. I also pay private mortgage insurance ($17.00 monthly) on top of the mortgage. I have excellent credit. The property is worth approximately $95,000. I have inquired at a number of lending institutes about refinancing. All the banks quote great rates in the paper and on the Web. My problem is the low mortgage amount. None of the lending institutes will give me the advertised price for such a small amount. On top of this, they are all asking approximately $1500.00 for closing costs. A $1500.00 cost to borrow $35,000.00 seems outrageous. If I remain at this residence for ten more years I will have the balance of the mortgage paid off. There is however a good chance that I will relocate in two years. Ideally I would like to refinance with little or no closing costs. I would be willing to pay over the going mortgage rate in order to do this. I at least would like to eliminate the PMI. Do you have any suggestions?

Yes, I have a suggestion for you. Several years ago, I replaced an 8 3/4% mortgage with a 7 1/4% home equity loan at a New Jersey bank. It cost me only $35 for the entire process and paid for itself (in savings on the monthly payment amount) in about a week. That was it...$35 in closing costs...not $1,500. If I were you, I'd look for a similar deal. The interest on your loan will still be tax deductible. Make the loan term equal to whatever number of years remains on your current loan or less. Also, you have way too much equity in your home ($95,000 - $35,000 = $60,000) to be paying PMI. Ask you lender to stop charging this ASAP. Only homes with less than 20% equity require PMI. One more suggestion: invest the savings from your new loan for a future financial goal (e.g., retirement). Good luck.