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Should I refinance?

We refinanced our FHA loan 2 years ago at 5% on a 30 yr fixed loan. At these record rates I have been increasingly looking into refinancing but have been told in the past that even with the loan rates that refinancing won't help considering the current insurance rates. What should I do? We are looking to move in the next 2 years and I figured refinancing to save a few hundred $$$ would be in our best interest to help pay down some of our other debt. by smq1221 from Shady Side, Maryland. Nov 30th 2012 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,414 contributions

If someone will give you a low/no cost loan, and there's enough monthly savings to offset any added costs (upfront MI is 1.75%, added to your loan), then it would be worth pursuing even if you're only going to be there for 2 more years... but you need to look at your total loan package, not just the monthly savings.. if you save $200 per month, but you added $6000 to your loan, it would take 30 months to break even, so it's important to look at the complete offer... I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Nov 30th 2012
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Bert Carpenter (BertCarpenter)
#37 ranked lender in Arizona - 1,815 contributions

Clearly the moving in two years is important to any decision you make. I would consider a 5-1 FHA ARM. You will need to calculate the total costs for the refinance of the new loan, including up-front MIP premiums, also, what is the change in the monthly MIP on your current vs the new. A good mortgage Banker/broker can help you with these calculations. The concept is simple. Take your existing loan. Use an amortization schedule to determine what your principle balance will be in the month you are thinking of selling. For the new loan, have your Mortgage Banker/Broker calculate what the principal balance would be in that same month, assuming that you continued to pay the same payment you are paying now, with the extra going to principal. If the balance on the old loan is lower than the balance on the new loan (plus any costs you are to pay escrow when the new loan closes) then the refinance is not in your best interest. If it is lower, then it probably is good for you. Right now I am showing a 5-1 FHA ARM Note rate in the mid 2s. I would think the numbers are going to be pretty favorable for you if refinance. By the way, when you do refinance, you do not have to pay anything extra toward principal, instead you can use it to pay down other debt like you mentioned. Don't forget to check out your selected Mortgage Originator at the National Mortgage Licensing System at www.NMLSConsumerAccess.org ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Nov 30th 2012
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Carlo Sanchez (MortgageLendingPro)
#0 ranked lender in Utah - 1,163 contributions

The Moving part of your life is VERY important.If you truly think you will then I would suggest that you do a streamline refinance into a 5/1 or 3/1 ARM, which ever will give you a lower rate and Definitely don't pay any fees other than escrow. This will give you the lowest payment so you can pay down some of your debt but be VERY diligent in doing so. Contact a LOCAL lender and not the National Lenders or Big Banks. They cost WAAAAY too much and do NOT have the best rates. Your LOCAL lender will. Good Luck and if you move to Utah please give me a call.

Nov 30th 2012
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Lynn Bossi Kinsel (LynnKinsel)
#39 ranked lender in Virginia - 61 contributions

I am working with a borrower who is in a similar situation. Even with the current MI rates, she is still saving $137 per month. I am also able to pay for her closing costs AND escrows with a streamline transaction and no appraisal. I am a mortgage broker based out of Laurel, MD. Please feel free to call me with further questions. Lynn Bossi Kinsel, NMLS#259819, Patriot Mortgage 804-677-8588.

Nov 30th 2012
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Brian Mayer (usdaloans)
#40 ranked lender in Maryland - 30 contributions

It depends on the loan amount. There is a 2% funding fee plus potential closing costs that have to be paid and only 2 years to make up the costs. As an example lets assume a new 3% FHA ARM loan is paying back 3% as a lender credit and your closing costs are 3k + 2% A loan amount of 150k would produce a $4500 but your costs are $6,000 (3k + 2% = $6,000) You are short $1500If it was a 300k loan a 3% lender credit pays 9k so you would be fine 3k + 2% = 9kYou close with no money out of pocket and no increase in loan amount plus no increase in your principle balance. Brian Mayer 443-624-9398

Nov 30th 2012
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Jason Vondrak (jvondrak)
#217 ranked lender in California - 1,741 contributions

If you are able to refinance without any costs into an ARM that might be the best scenario for you since you are moving. If you were planning to stay in you home long term, an ARM would not be recommended. Since you are planning on moving in two years an ARM would give you the lowest interest rate possible and you will move before you reach the adjustment period. You will want to get all of the numbers and make a decision to see how much you will save over the next two year before you move compared to the cost it will take to refinance.

Nov 30th 2012
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,232 contributions

Depending on the amount of the loan, you should be able to refinance and receive enough in lender credits to make it a true no cost loan option, and still see monthly savings. You won't get the lowest possible interest rate but i fyou are probably moving in 2 years or so, it doesn't make sense to increase your balance significantly to reduce your monthly payment. I do lown in Maryland and would be happy to look at options with you.

Nov 30th 2012
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Joyce Ettingoff (speedlad)
#35 ranked lender in Maryland - 67 contributions

It looks like we could get you a no cost refinance..assuming you have made your payments timely in the last year..without an appraisal..subject to review..we are located in Rockville, Maryland..Our company is called The Mortgage Link INC. Jorge Posada NMLS# 206531 we can do this easily and quickly and it would be worth your while even if you remain in the home only another year..Call me directly Joyce Ettingoff 301 915 5644

Nov 30th 2012
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Hugh Duckett (duante.duckett)
#12 ranked lender in Maryland - 10 contributions

You can get a FHA loan at 3.250% with 0 closing costs. It would be worth refinancing to save the money. Although you plan on moving in 2 years, we all know that plans often change. Take advantage of the low rates. Call me 443-306-6131, I can quote you a payment.

Nov 30th 2012
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