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Hey all. I have a quick question (well, not so quick I guess).
I've been looking at refinancing my home. FHA 4.75% originated in early 2010... so still paying PMI (~$50 per month). LTV should be right at 20% (it will be close; therein lines the risk, I guess).
The goal of the refinance is simply to lower the rate and get rid of PMI. Closing costs will be around 2k. I will be refinancing at the value of the mortgage (no money out), to conventional at 15, 20, or 30 years. Lenders don't quite feel comfortable giving me 15 years, so I'll shoot for 30 and just make the extra payments anyway.
When I started this a few weeks ago rates were at 3.75, and now are above 4%. I will be saving about 11-13% on my monthly minimum mortgage payment, or 18% total by getting rid of PMI. I feel like I missed out on the better rates in the time I submitted my paperwork, shopped for lenders, and am now at the point to lock a rate and move on to the appraisal.
The difference in monthly payments between 3.75, 4.0, and now 4.125% is like $10-$20 bucks per month... and remember, I'll be adding extra principal payments each month (so no matter my rate, I'll be paying the same monthly payment anyway). The goal is to pay off the 30 year note in 15 or so years.
Break-even point on costs is 10-12 months.
So I guess my questions are... so I just lock in NOW, at 4.125, knowing that my waiting has cost me .375 on the rate (really, only about $20 per month) instead of hoping they'll fall back to at least 4%.... and more importantly, is any difference I would get in these rates simply made up on the back end by the mortgage interest deduction on taxes?
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