Financing in 90064>Question Details

Vpmsara, Home Buyer in Orange, CA

Is it worth refinancing an April'13 initiated 30 yrs fixed FHA loan @ 3.75% interest rate plus $610/- PMI/mo to a 4.3% conventional loan without

Asked by Vpmsara, Orange, CA Wed Jul 16, 2014

PMI? I bought this home in May 2013 for $650,000/- on a 30 years fixed FHA @ 3.75% interest rate plus $610/- per month PMI. The home equity has raised over 20% in the last 15 months. Is it worth refinancing at 4.3% interest rate with out PMI for 30 years? Do I really save money on long term by refinancing? This is my 1st home and I live in this home. I would greatly appreciate your answer.

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In order to see if you will "save money" you have to calculate what you would pay for the entire term of the loan compared to the amount you would pay with the refinance. A loan officer will also be able to do this and usually it's easy to see in black and white.
0 votes Thank Flag Link Mon Apr 6, 2015
Of course, you are waiting for ...?

* a miracle...

* another free refinance..

* doom and gloom...and your equity goes to -10%, so you can pay for present refi costs?

* you came on Trulia and figured out , right thing to do...(Correct answer)

Maybe, time to look for a financial advisor also..

* zero percent interest rates
0 votes Thank Flag Link Fri Aug 8, 2014
Yes - get out of that PMI as it is no longer tax deductible.. plus -even tho the rate is higher - your tax deduction is now higher too! Considering your loan amount is over 600k, you probably need lower taxes- correct?
0 votes Thank Flag Link Fri Aug 8, 2014
Without even calculating the difference, off the top I would say definitely because currently 610 goes out the window for the most part while the int may be a little higher at least its going towards paying off your loan versus insurance- just my opinion. You can also plug in your figures on an amortization calculator as well- good luck
0 votes Thank Flag Link Sat Aug 2, 2014
Have a lender run the numbers for you on this. If you avoid PMI on the conventional loan it may make sense.
0 votes Thank Flag Link Tue Jul 29, 2014
If you can keep the fees from your new loan reasonably low, I would definitely recommend you going for it. Even at an increased rate you would save about $400.00 per month. And if the additional $400 buck per month is not an issue for you, applying it to your new mortgage payments will shorten your term 6 to 7 years. If there is anything I can do to assist you please do contact me. Good Luck!
0 votes Thank Flag Link Tue Jul 29, 2014
I recommend talking with a mortgage broker. If you don't have one, try Brian Guth at Agency Capital Partners; https://www.facebook.com/pages/Brian-Guth-Jason-Vanderpoort/…

We LOVED him!!!

My initial guess is you can run the calculations, but in terms of long-term payments vs upfront refi costs, he'll be able to sort that more quickly for you.
0 votes Thank Flag Link Fri Jul 18, 2014
In addition, in terms of money on long term refinancing the answer will depend on how long you would stay in your home. If you like to stay more then 10 years from now for example, than you will definitely save for the fist eleven years as per new FHA rule whereas you have to keep your FHA MI for the first eleven years. Just multiply $433.00, the difference in your payment, by 121 months, it will give the amount of $57,156.00. This is an approximate amount and only for the first eleven years.
0 votes Thank Flag Link Thu Jul 17, 2014
Assuming that you have purchased your home for $650K with 3.5% down and your loan amount is approximately $627,000, at 3.75% rate, your total monthly payment will be $3,553.00 ($2,903.00 plus $650 PMI). If you did refinance into a conventional loan with equity over 20% at 4.375%, your payment would be for loan amount of $625,000, (you already have paid a bit to your outstanding principal since you took the mortgage) your payment will be $3,120.00. In the end, you will pay $217.00 per month more for your mortgage instead of $650 PMI. Thus, you will get rid of PMI, and save $433 in your monthly mortgage payment. Because I do not have enough details, this is the best answer I can give to you at this time.
Why the loan amount of $625,000? Because after $625,500, conforming limits loan amount, it is becoming a Jumbo loan, which does not comply fully with Fannie May requirements, and directly affects your interest rate. Usually Jumbo interest rates are higher than conforming. Today at our company, we have 30 years fixed rate of 4.375%, APR 4.375%, No Points, No Closing Costs. In this case your existing outstanding loan amount will stay the same after refinance.
0 votes Thank Flag Link Thu Jul 17, 2014
If you are not selling your home and plan on living there for awhile it may make sense less then 4yrs... the difference is about $206 per month so you are about $400 a month in PMI that if you did not have FHA and you applied the $400 a month to your principal you would pay off the mortgage 71 months early if taken to term!

If you do plan on selling in the next 5yrs your fees to refinance would probably be about even considering most loans will have fees and charges to equal about 4% with title, escrows, lender, underwriting, appraisal fees etc...

Hope this helped
0 votes Thank Flag Link Thu Jul 17, 2014
well, to find your answer, we must establish a few points...you bought just over a year ago, @$650...and from the fact you have PMI, you didn't come with 20% down, but did you have any d.p. at all?...a 20% increase in value, your property is roughly $780K as we speak...so you have eliminated the need for PMI altogether if you refi the same dollar amount of your current loan, you now have a completely tax deductible loan, getting rid of the PMI portion...and you keep your payment roughly the same, even with the approx. .5% since your $610 a month is now tax deductible...if you plan to sell in the next 5 years, the savings is there immediately...if you plan on staying longer, the savings is less but if you anticipate higher earning power, you can add an additional payment per year and decrease your overall interest payments as well...and here is a perk...instead of refinancing the entire amount of the increase in the current equity, thus increasing your monthly "nut"...refi the $650K, but get a line of credit for $50k that you do not touch, but can be used in an emergency with only a signature on your part...it's nice to have a cushion available and waiting, at such a low interest rate...
0 votes Thank Flag Link Thu Jul 17, 2014
Get out of FHA asap! You will save quite a bit by refinancing into a conventional loan and getting rid of that mortgage insurance. Feel free to give me a call and I will run the numbers for you 707-478-0637
Jennifer.beeston@guaranteedrate.com
0 votes Thank Flag Link Thu Jul 17, 2014
If you plan on owning your house for the full 30 years, you're not going to save money by doing this refi.

That said, If you do the refi, you will save money for the next 4 years for sure. So, if you plan on selling your home in the next 4-5 years or so, then you will be saving money by not paying that PMI. I don't have enough information about your current loan to tell you how much you will save and at what year exactly your savings will expire.

I can also recommend you to Bridgette from WestCom Lending, Inc. if you are looking for a great lender. She can also explain the exact figures for you. (818) 335-0283

Good luck!


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Realtor #01791821
RE-Search Concept
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(818) 967-9626 mobile
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0 votes Thank Flag Link Thu Jul 17, 2014
You've received some great advice from some pretty astute RE Professionals. The tax advantage makes it a worthy consideration. However, you really should consult with an experienced loan professional or your current lender for a better read.
0 votes Thank Flag Link Thu Jul 17, 2014
Hi there,

Your PMI payment is not tax deductible where the interest on your loan is.

I would recommend refinancing at the lowest rate possible for a 30 year fixed, if you plan on keeping this home long term. $610 per month is a lot of money just given to the bank to "secure" your loan.

If you see yourself moving on in 5 to 7 years, it's not a bad idea to get a 7 or 10 year ARM loan. You will save money towards your up-leg. If you plan to keep this home indefinitely, try to make one full extra payment per year towards your principal on your 30 year fixed loan to. This will shorten your loan from 30 years to nearly 20 years for the payoff.

Hope this info helps.

Kind regards,

Mark A. Diffie

Lighthouse Properties
P. 310.486.7085 F. 310.427.7196
b.r.e. 01727235
mdiffie@gmail.com
http://www.MarkDiffie.com
0 votes Thank Flag Link Thu Jul 17, 2014
Congratulations on your purchase! It sounds like you made a great investment!
The best thing to do is to speak to a reputable mortgage lender, who can assess your situation, and provide you with the best possible loan package for your situation.
I do have a network of lenders that I work with, please let me know if you need a referral.

Nicole Fedorchek, Realtor
Tarbell Realtors
714-914-5097
realtornicolef@gmail.com
http://www.nicolefedorchek.com
0 votes Thank Flag Link Thu Jul 17, 2014
Yes it would be extremely worth it. Since FHA no longer offers a feature where PMI can be removed when your home reaches 80% loan to value due to appreciation or paying down your loan, refinancing will be the only way to have the PMI removed. Based on the figures given, doing the refi and having the PMI removed would give you a net monthly savings of approximately $400. Any costs associated with the refi would most likely be recouped within the first year. It would be a great choice.

If you are ever thinking about a relocation, we offer a variety of quality real estate services.

Chris Thompson, Broker, GRI
Chris Thompson Realty, a member of Siris Realty Group, Inc
818-279-2422
0 votes Thank Flag Link Thu Jul 17, 2014
Sounds like you made a great investment - that is a lot of appreciation in one year!

$610/mo PMI is a lot to pay over 30 years, and not sure if you can deduct MI off your taxes, ask your CPA.

I would be happy to run the numbers for you. If your home is 80% LTV or better, your rates would be pretty good right now. Also, the 15 year fixed might be close in your total payments you have now with PITI/MIP.

Give me a call at 773.516.6859 and I'll put together the numbers for you and go over your options, you are in a great position!

With warm regards,

Mary Kay Laurent
Associate Vice President of Mortgage Lending
marykay.laurent@guaranteedrate.com
http://www.guaranteedrate.com/MaryKayLaurent

o: 773.516.6859 - m: 312.403.4150 - f: 773.328.1740
3940 North Ravenswood , Chicago, IL 60613
NMLS ID: 870598

NMLS ID 2611 - NMLS Consumer Access - Licensing Information
State License Numbers: CA - CA-DOC870598 - 4130699, IL - 031.0032236 - MB.0005932, WA - MLO-870598 - CL-2611
0 votes Thank Flag Link Thu Jul 17, 2014
Yes it would be worth it. I would be more than happy to help you with the refinance!

I do not check replies, so if you have a comment or question email me here:
AGreer@TheMortgageOutlet.com

Alex Greer
Loan Officer
408-352-5147
NMLS #1056079
http://www.TheMortgageOutlet.com
0 votes Thank Flag Link Thu Jul 17, 2014
Good morning Vpmsara! I think that is it a hands down no brainer as you will recover the third party closing costs in short order saving $610 per month. although depending on how long you plan on living in and owning this home, you might want to take advantage of Pacificwide Lendings 10 year ARM at 3.75%. Feel free to give me a call or an email and we can discuss your options. thank you and have a great day!
Best regards, Darren Carlin
0 votes Thank Flag Link Thu Jul 17, 2014
Hello, talk to a mortgage professional and see where it stops making sense financially. Just off the prelim information you will save money but is it worth paying title/escrow/lender fees and how long will it take to offset those costs, it could be 12 months or more. A mortgage professional like myself and my peers can draw this out for you quickly. Best wishes.
0 votes Thank Flag Link Thu Jul 17, 2014
Your monthly payment without PMI would probably be a couple hundred more, but not as high as $600. So it's worth speaking to a loan officer. The cost of refinance varies. I refinanced mine with Cash Call at no cost. They built their pricing with the cost added, but still cheaper than any major banks. Or if it's not free then you can calculate how long would it take to break even or amortize that refinance cost. If you plan to live for at least say 2-3 years, then usually it pays off.
0 votes Thank Flag Link Thu Jul 17, 2014
Contact Suzanne Harrison with Bank of America she is a loan officer and can offer you some insight. suzanne.harrison@bankofamerica.com
0 votes Thank Flag Link Wed Jul 16, 2014
No it is not. Unless ur payment is lower and you have no or low cost to refinance. Steady as it goes.....
0 votes Thank Flag Link Wed Jul 16, 2014
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