Should I refi and pay PMI? (loan, interest rate, credit score, 30 year fixed)

[porterror]

Got a 30 year Mortgage @ 5.65% in 2008. Put down 20% (no PMI) for a 310k house and owe 248k on the mortgage. Skip to today and our house is estimated by zillow at 260k-270k. I'd like to refi the 233k I owe on our current mortgage into lower rate 30 year fixed, but I'm not sure if it would be worth it because I would probably have to pay some PMI. We are not looking long term for staying in this house and will hopefully be selling in 4-5 years.

What is a good financial decssion to make? Stay in current loan? 26 years left @ 5.65% or try to refi and
pay some PMI?

[Debsi]

Originally Posted by porterror

Got a 30 year Mortgage @ 5.65% in 2008. Put down 20% (no PMI) for a 310k house and owe 248k on the mortgage. Skip to today and our house is estimated by zillow at 260k-270k. I'd like to refi the 233k I owe on our current mortgage into lower rate 30 year fixed, but I'm not sure if it would be worth it because I would probably have to pay some PMI. We are not looking long term for staying in this house and will hopefully be selling in 4-5 years.

What is a good financial decssion to make? Stay in current loan? 26 years left @ 5.65% or try to refi and
pay some PMI?

Is your loan owned by Fannie Mae or Freddie Mac? You may be eligible for a HARP refinance without an appraisal.

Does Fannie or Freddie Own Your Loan?

[snowdenscold]

Well the difference in interest rates is higher than any PMI amount, right?

For example, let's say you re-fi'd to 3.75 from 5.65 - that's a 1.9% difference. PMI might only be 1%. So wouldn't you come out ahead?

[porterror]

no my loan does not qualify for HARP (my mortgage is not fannie or freddie). I've been quoted at 3.4% APR with fees included in that rate. My credit score is above 660+

[Modification Specialist]

I don't know your exact situation - If you are going to be paying PMI, Don't Do It - it is not worth it.

You mention refinancing and being quoted, this telling me - you talking with a broker representing another mortgage company about doing a total refi with another Lender possible looking at an FHA loan.

Effective this year the amount of PMI upfront is 1.75%, the monthly PMI is now 1.25% of the loan balance.

Looking at your numbers - your payment now is around 1,428.41 (360months x 5.625% x $248K) New loan 360 x 3.4% x $233k + 5% {$11650.00 total closing costs including $4077.50 upfront 1.75% PMI} new loan amount $244650.
Loan amount $244650 x 3.4% x 360 = P/I payment 1,084.98 + $254.81 (1.25% Monthly PMI) = $1339.79 Net difference $1428.41 - 1339.79 = $88.62 monthly savings x 312 months left, lifetime of loan save $27649.44. Selling in five years - net savings $5317.20.
(Point - not a good financial move)

I crunch numbers concerning mortgages almost everyday with home owners across America. As Debsi mentions above, have you contacted your existing lender, and asked about a Stream Line refinance. You eligible for an in house refinance without an appraisal (also without PMI).

I caution you because your only going to stay in your house for another 5 years. The first few years on any mortgage, almost 100% of the mortgage is applied to interest. After 5 to 6 years into a mortgage the amount paid, more is going to principle and less is going to interest. In 4 to five years - the amount that is being paid, you are increasing your equity faster. You are going to need to look at would be gained by throwing away the past four years vs. the net savings in the short term future.

Below is a link to a calculator you can use to look at your cumulative principal to compare both loans.

http://www.vertex42.com/Files/downlo...calculator.xls


Good Luck

[Debsi]

As I just pointed out in another thread, Mod Specialist seems to think MIP (FHA) and PMI (private, conventional) are calculated the same way.

This is not the case.