Financing in Redlands>Question Details

avis_evans, Home Buyer in New Orleans, LA

I want to refnance my 15 yrs mortgate at 4.25 I have been given a quote of 3.75 for 15 years not sure to do conventionl or fha i will pay $ 220 less.

Asked by avis_evans, New Orleans, LA Tue Mar 25, 2014

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Simon's answer is exactly the reason that agents should not answer mortgage questions. Virtually everything he said is incorrect.

" FHA has an upfront fee of 1.75% which is wrapped into your loan and a monthly fee of 1.30 % if the original loan amount to value is less than 95% and 1.35% if you put less than 5% down."

Untrue, this is a 15 year and it's .45 for 90% LTV and under and .70 for over 90% LTV.

"Typically, once you reach a 20% equity position, the PMI is removed. Not so with the new FHA loan changes. The insurance stays on your loan for the life of the loan for all new loans starting in June 3, 2013."

Also untrue. Not all FHA loans have insurance for the life of the loan, if the LTV is 90% LTV or less the MIP lasts for 11 years.

avis_evans

Please make sure you have a licensed mortgage loan officer in your state do a side by side comparison for you so you get the facts.
1 vote Thank Flag Link Tue Mar 25, 2014
3.75% is not an attractive rate for a 15 year loan. Rates improved considerably today. FHA is the loan of last resort these days due to the high PMI cost. I'd be glad to discuss your situation (I write loans nationally), feel free to contact me through my profile. Thanks, Ted
0 votes Thank Flag Link Thu Jun 12, 2014
If you can go conventional and avoid mortgage insurance, do that.
0 votes Thank Flag Link Fri May 30, 2014
Seems like a high rate to me, but I have really low rates so it may be normal.

My rates are way better, but I would need to know a bit more, is this home owner occupied or a rental?

How much do you owe on the house. etc.

contact me if you like more information
0 votes Thank Flag Link Thu May 29, 2014
Conventional rates are well below 3.75% on 15 year loans. Definitely avoid FHA at all costs unless you have no other options. Like a detailed quote? Feel free to give me a call at 314-740-0004. I write loans nationwide. Here's a link to my profile on Mortgage News Daily if you'd like a little more info: http://www.mortgagenewsdaily.com/members/trood/default.aspx
0 votes Thank Flag Link Wed Mar 26, 2014
If you do not have to go FHA DON'T. Best of luck to you..
0 votes Thank Flag Link Tue Mar 25, 2014
If you can afford the 15 year amortization, it is a better financial move. You will pay off the home much quicker and will pay less in interest in the end.

As for FHA, if you have less than 20% equity, please be aware of some very expensive changes that have been made with FHA loans. Because you would be putting less than 20% down, you will be required to pay mortgage insurance. FHA has an upfront fee of 1.75% which is wrapped into your loan and a monthly fee of 1.30 % if the original loan amount to value is less than 95% and 1.35% if you put less than 5% down.

Typically, once you reach a 20% equity position, the PMI is removed. Not so with the new FHA loan changes. The insurance stays on your loan for the life of the loan for all new loans starting in June 3, 2013.

For example, if you are paying $112.50 (borrowing $100,000) per month in mortgage insurance and you pay the mortgage for the full 30 years, you will have paid $40,500 for insurance that benefits the lender.

Make sure you weigh the long-term costs to the short term benefits before you go get a loan.
0 votes Thank Flag Link Tue Mar 25, 2014
The choice of FHA vs. Conventional really depends on the value of the home, how much you owe, and your credit scores.

Generally, Conventional is going to be less expensive because they don't charge an up front fee of 1.75% like FHA does, and FHA requires monthly PMI regardless of the amount of equity you have in the home, while Conventional does not require PMI if you have 20% equity.

However, if your credit scores are lower (below 700) then the rate you pay might be higher on Conventional than FHA.

I can tell you that there are way better rates available on the 15 yr program right now (FHA and Conventional), but your credit scores and the amount of equity in the home will determine whether you qualify for the lowest rate or whether it will be a little higher.

Feel free to call and we can discuss YOUR particular details and figure what the best option avaialble is for your circumstances.

Tony

Tony Grech | Mortgage Loan Originator | NMLS 977416
PMAC Lending Services, Inc.
24901 Northwestern Highway Suite 407
Southfield, MI 48075
Direct (248) 728-0078 | Fax (248) 595-7130 | Cell (313) 622-7383
tony.grech@pmac.com
0 votes Thank Flag Link Tue Mar 25, 2014
Yes. I would be more than happy to help you. Just send me an email if you have any further questions.

Alex Greer
Loan Officer
NMLS #1056079

http://www.TheMortgageOutlet.com
408-352-5147
AGreer@TheMortgageOutlet.com
0 votes Thank Flag Link Tue Mar 25, 2014
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