Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
i'm looking for some advice on the following scenario.
i'm trying to refinance my home. i live in ny and have good credit, 740 score. my existing loan balance is $563k, i've just had an appraisal done which has come back at $625k, so the loan will need to be 90% ltv.
the bank i'm working with has two scenarios:
1. conventional loan at 5%. i will need to pay pmi.
2. fha loan at 4.75% plus the mi and upfront premium.
they're suggesting the fha deal is better because if i'm paying mi anyway, i might as well get a lower rate.
what do people think? do i have other options - i've seen a few references on the board to a second mortgage as an alternative. is there anything else i need to be aware of?
2nd mortgage above 80% CLTV may be tough in NY, although a local credit union or a community bank would probably be a more likely place to offer them.
What is the rate of the monthly mortgage insurance on the conventional loan? Do they have an option where you can pay an upfront amount of mortgage insurance so you don't have to pay the monthly amount?
FHA's monthly mortgage insurance is going up by .25% on April 18th, so you'd want to have your FHA case # pulled before then. Right now you'd be at an annual mortgage insurance amount of .85%. If you take a 15-year fixed, and have at least 10% equity, then with FHA you wouldn't have any monthly mortgage insurance (will be .25% after 4/17/11 however).
OP, ask your lender for various options on the conventional MI. If your income is > 100K per year, your MI deductibility is reduced, where interest has no restrictions. Ask your lender for "super single financed mi" and "lender funded mi." If they stutter and act like they don't know what they are talking about, contact a competitor for a quote using those MI options. (I'm not suggesting you move the loan - at least not yet). Take what you learn back to lender #1 and be a bit firmer on the issue.
Note: FHA has dominated the mortgage lending arena and there are quite a few lenders that are not up on all the MI options that are open......not all lenders can offer all the variations. And to further complicate matters, there are at least 4 major MI companies, all with varying premiums and plans.
2nd mortgage above 80% CLTV may be tough in NY, although a local credit union or a community bank would probably be a more likely place to offer them.
What is the rate of the monthly mortgage insurance on the conventional loan? Do they have an option where you can pay an upfront amount of mortgage insurance so you don't have to pay the monthly amount?
FHA's monthly mortgage insurance is going up by .25% on April 18th, so you'd want to have your FHA case # pulled before then. Right now you'd be at an annual mortgage insurance amount of .85%. If you take a 15-year fixed, and have at least 10% equity, then with FHA you wouldn't have any monthly mortgage insurance (will be .25% after 4/17/11 however).
thanks for the replies.
mi on the conventional loan is $407, which is more than the fha - $393. not sure about the upfront option, i will ask.
all in the fha loan is $83 a month cheaper, despite the upfront mi premium.
OP, ask your lender for various options on the conventional MI. If your income is > 100K per year, your MI deductibility is reduced, where interest has no restrictions. Ask your lender for "super single financed mi" and "lender funded mi." If they stutter and act like they don't know what they are talking about, contact a competitor for a quote using those MI options. (I'm not suggesting you move the loan - at least not yet). Take what you learn back to lender #1 and be a bit firmer on the issue.
Note: FHA has dominated the mortgage lending arena and there are quite a few lenders that are not up on all the MI options that are open......not all lenders can offer all the variations. And to further complicate matters, there are at least 4 major MI companies, all with varying premiums and plans.
my income is > $100k.
why am i likely to get a better deal using the options you suggest?
Because for an upfront fee (you pay an upfront mortgage insurance amount, similar to FHA) you can do away with the monthly mortgage insurance conventional would have - and then it'd be a better option than FHA.
Because for an upfront fee (you pay an upfront mortgage insurance amount, similar to FHA) you can do away with the monthly mortgage insurance conventional would have - and then it'd be a better option than FHA.
paid upfront would be 2.95 points = $16,593.
monthly insurance is $407. so the break-even is 3.5 years but i have to pay the fee up-front.
I'm not sure how long you plan to stay in your house but one thing to think about is that FHA loans are assumable if you sell, as long as the buyer is qualified. The general consensus is that interest rates are going nowhere but up, so if you have a 4.75% mortgage that's assumable, it's a huge benefit to a potential buyer.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
