When you got your FHA mortgage it was at a point where the MIP would fall off of there once you paid it down to a 78% of the appraisal value, when took out the loan. My first instinct was to say no, not to do it, but then I did the math.
So I went over the numbers and found that you save about $280 a month by refinancing with me. Now my rate is 3.875% with no closing costs (there is an appraisal deposit) and I am betting the other lenders have about $2500 in closing costs. So of course the numbers look much better with me than the other lenders you have called.
But your payment only goes down like that for about 6 years, after that the payment would be $75 more on the conventional loan. So you save about $20,000 at first and then slowly start giving it back.
Interestingly, the amount of cash outlay at the time your FHA would be paid off is about the same, but you would have 3 more years to pay on the conventional. So in some cases it would be better to not do it.
I am going to say you do refinance and here is why. If you take the $280 a month that you save during the first 6-7 years of the loan, and apply it to the pay off, it pays down the mortgage in 25 years. as opposed to 27 years you have now.
So if you pay down the mortgage or better yet put the $280 a month into a savings plan of some sort you come out way ahead.
Here is the problem, most people will just run out and spend the difference which means in 27 years the outlay on both loans is about the same and the conventional loan will still have three years left to pay. But perhaps with the lower cash flow, hopefully it will help keep you out of credit card debt.
Still with the time value of money, over the next 6 years you save about $20,000 by refinancing not even counting the tax savings. I would then advise doing the refinance, calling me and saving the extra $65 a month.
Another reason is that if you sell the house or refinance the house in the say 20 years or less you come out ahead by refinancing every time. Most likely you will sell or refinance in the 20 years. Using your other lenders you save less money and the numbers will not be as good.
To further go over the numbers call me at 714-968-2500.... more
Specializing in Illinois and California
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*We do Conventional loans down to a 620 score
*We do FHA loans down to a 580 score
*We do USDA loans down to a 620 score (no money down)
*We do $100 down payment FHA program
*Unlimited Loan To Value refinances on Fannie/Freddie refinances (only on loans originated before May 31st 2009
*We do VA loans down to a 600 score
*We give free counseling on what needs to be done to improve your credit score.
*We do 203k loans down to a 640 score
*We do reverse mortgages
*We do JUMBO loans to 12 million
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