Rr-finance advice, please (PMI, loan, credit score, fees)

[linicx]

My current rate is 8% for 3 years. We paid 15% down and probably owe less than the current market value. We volentarily pay an amount larger than our payment. We are not saddled with a combined PMI. I would like to re-fi to a fixed lower rate through FHA. Any thoughts?

[renriq02]

I wouldn't use FHA if you have at least 15% equity.

What is your credit score?

Originally Posted by linicx

My current rate is 8% for 3 years. We paid 15% down and probably owe less than the current market value. We volentarily pay an amount larger than our payment. We are not saddled with a combined PMI. I would like to re-fi to a fixed lower rate through FHA. Any thoughts?

[VictorBurek]

You definitely should look into a refinance. Whether you refinance into a FHA loan or a conventional loan will be determined by your credit score. I find that clients with scores under 660 are typically better off with FHA, but if above that going conventional should be the better way for you. The reason for this is if your scores are above 660, you will get the same rate going conventional as you would doing a FHA loan; however, FHA loan will come with higher costs due to a up front mortgage insurance fee you must pay. But if scores are under 660, your rate will be higher with the conventional loan, making the FHA refinance more appealing even though the costs will be higher. You should easily be able to lower your rate by about 1.5%, so dont get hung up it what it costs, look out how much you will save. For each $100,000 of mortgage, lowering rate by 1.5% saves you $1500 per year in interest.

[rcarrillo]

The problem with refinancing to FHA is that you will be paying both an upfront MI of 1.5% and a monthly MI payment. Once you have it, you need to pay it for 5 years regardless of LTV. So you are going from an 85% LTV situation with no PMI to one that requires PMI for the next 5 years.

It will depends on your credit, income, assets and so forth if you are better served by FHA or VA, but even with a 620-640 score you may be better off with a conventional loan. No one can tell for sure until they have all your specifics in front of them, but its worth looking into refinance options.

[Mortgage John]

It would depend on your credit situation, as well as the loan to value. You said you paid 15% down and owe less than the current value. Sadly though, your current loan to value may be much higher, due to market depreciation in the last year or two. It could easily be 90 or 95% now, with current conditions. If that's the case and your credit will allow it, then a FHA loan could very well be beneficial to you.

[davidhomes]

Sounds like FHA is the way to go. even though you have to pay the up front fee at closing, the MI is less than getting a conventional loan at 90% or so. Either way, you would be wise to refi. Good luck!!

[renriq02]

Conventional Lender Paid PMI at 90% is way less in fees/MI than a FHA mortgage.

Originally Posted by davidhomes

Sounds like FHA is the way to go. even though you have to pay the up front fee at closing, the MI is less than getting a conventional loan at 90% or so. Either way, you would be wise to refi. Good luck!!