I've been debating doing a FHA streamline refinance since interest rates have dropped since I bought my house in June of 2009.

Right now I have a 5.875% interest rate. I've locked in with a lender at 4.5%. Although the rate is locked, I have not signed anything nor made any commitment to the refinance.

Closing costs for the refinance are going to be ~$5k. My monthly principal + interest payment will go down by ~$150.

I calculated that I'll make up the $5k in 3 years. I have no immediate plans to sell the house.

Should I do it? Or should I wait until I can refinance into a conventional loan sometime in the future?

 

be VERY weary of this program...."streamline" is the exact opposite of what the program is. There is still very much red tape to cut, very much manipulation of appraisals, infact there was an article this weekend in the washington post about the rampant problems with the appraisal industry and how the banks just haphazardly make adjustments to appraisals on a whim and appraisers dont even go to a physical inspection. one poor sap got denied a mortgage because some dim-witted appraiser used a VACANT LOT as a comperable to his home when developing an appraisal. Id wait, its ALOT of hassle, even if it works, to get a 150 a month reduction for 5k in closing costs

 

Have you tried to re-fi to that rate without closing costs?

 

on what Mike said.

Problem is that a lot of times the bank will roll the closing costs into the new loan, is that correct?

Another concern is that you have to have equity in the house, or at least only be upside down a LITTLE (~5%) of the outstanding balance of the loan.

 

Contact your current lender, let them know you have a better offer from another bank and see if they can re-fi w/o closing costs...

 

doesn't anyone do 100% refi's anymore? The value of our house dropped to a little more than what we owe on the house. I am being told that you can only refi 95%.

 

I have called five separate places three months ago and the general consensus was .

 

Generally speaking, refi's aren't worth it.

 

After talking through it with my fiancée, I decided to not do it. My requirements for refinancing from now on will be...

1) The new loan must be a conventional loan.
2) No closing costs.
3) No PMI/MIP

A co-worker of mine is refinancing with no closing costs (conventional to conventional). I don't know why, but any time I'm dealing with this much borrowed money I get nervous, lol. I think it's because the whole loan process is so convoluted that I'm paranoid about getting a bad deal. It was hard enough to get my current mortgage!

I don't need the extra money, and it's not like I'm pissing my mortgage payment away. The $5k could be better used today (home improvements) anyway.

Soo, I'll probably wait until my loan to value ratio is 80% (to avoid any loan insurance) through a combination of home improvements, market recovery, and simply paying down the loan. In other words...not any time soon.

 

^
Wise choice!

 

that's what i'm getting too, thanks America for ruining our borrowing laws.

 

^ As my buddy who owns his own mortgage company says... "The pendulum has swung from conservative to stupid".

 

Again, wise choice. Most people simple calculate the 'breakeven' time as Total closing cost / payment reduction-per-month. That's a ballpark figure that doesn't address the lost opportunity costs of that money and the risks that occur if you do need to sell early. Comparing no-cost to actual loan is the foolproof way of seeing if a refi makes sense.

I had a similar situation with a rental that I dropped refi activities because it took even longer to breakeven. A risk-free investment is simply buying down your current loan @ 5.875 - there are no risk-free investments paying that kind of return!

 

i am looking to refi from a 80/20 30 year to a 15 year fixed. The payment will be about $100 more than what i am currently paying now. I need to get the paperwork in to see what type of fha loan it is.

 

15 year rates now under 4%. I think I may actually do it!

 

You care to expand on your generalization?

 

Here is a pretty good link from Uncle Ben to help you determine if refinancing is worth it for you.
http://www.federalreserve.gov/pubs/r...gs/default.htm

 

It's raining Ben, Hallelujah. It's raining Ben, Amen...


<--- Closing 3rd refi since 2007. Each time lower rate and shorter duration, pass the sugar plz. Unlike BubbaMarkTL, I didn't overleverage myself or cry when assets depreciate, instead find a way to turn lemons into lemonade.

 

closing next wednesday it can't come soon enough.

 

Considering refinancing. I can get 3.75 with 1 point. Only been in house 2 months. We'll see how that goes.

 

nice, 4.0 no points 15 years.

 

Sorry I meant 3.875 with 1 point.

 

I'm finding now 3.75 with no points for 15 yr, and 30yr for 4%. I don't know which is better. With the 30yr my monthly payment drops by $210 a month, but with the 15yr it goes up by $500 (but pays off the house in 1/2 the time). I would love to not have a house payment in my mid 40's.

Any thoughts?

 

We closed tonight 15 yr 4% zero points. Our monthly payment goes up by $80 a month.

 

Congrats! I've got about the same deal assuming my appraisal comes back alright. I locked in at that rate. Looks like rates may have ticked up a little bit this week. If they happen to drop before I close I have the option to get the lower rate for 1/2 point which probably won't be worth it. When I locked in I was offered 3.75 with 1 point but decided against it.

 

Yes-- get a 20-year re-fi instead of a 15- or 30-year.

We did that in 2003, thus decreasing the monthly payment amount by $100 (due to a much lower interest rate) and shortening the payment period.

 

I would love to get into a 10 year, but really don't want to stretch that much.

 

My philosophy is pay it like it's a 10 year and those months where you can't make the extra principal payment, skip it.

You won't get the 10yr int rate but it gives you that safety in months where you can't do it.

 

Yep. We're at a good 20yr rate, but paying it more like a 14 year. We could move to a standard 15 year, but according to my math, we'd finish a year to 15 months ahead of what we're on pace for today.

Becomes a question how much is the hassle of a refi worth.

 

Well, that was easy. Moved to a 15yr, 4%, no points.

I'll probably make two half payments a month plus more principal. Could get this thing close to a 10 year.

 

I'd love to refinance to 15 years but no one wants to talk to me. I'm one of the 25% of mortgage owners that's "under water". I can easily afford my monthly payment but I don't have a lump sum to put toward my current mortgage. Going from 30 year loan down to 15 or 20 would not be a problem. With a stable, well paying job, plus perfect credit score (over 800), it's sad that no bank will even review my account.... maybe one of you can recommend something besides making extra payments toward the principal, I'm already doing that.

 

How much are you underwater?

 

Welcome to the nightmare millions are facing right now. If you dont have tens of thousands of dollars in cash to apply as a one-time payment to make up your negative equity, you are screwed and cannot refinance. Its a slippery slope that is screwing over a huge percentage of homeowners. There is alot of discussion out there on this very topic. The rates now are fantastic...but for the vast majority of homeowners, the rates are completely unobtainable due to the mess of the real estate market.

 

You can refi if you are willing to pay PMI.

 

No offense, but most of the millions signed up for exactly this "nightmare" when they bought a house without much of a downpayment in the midst of a big run-up in value.

If you played it conservative and you're stuck with a house that lost more than 20% value since you bought, then you really deserve sympathy.

 

About 35-40K. I just don't have that much cash to make a one time payment and I am NOT touching my 401k.

My condo lost over 20% of its value. There are programs to help people who are not able to make payments but nothing for people like me who want to modify terms of their mortgages. I'd never walk away from it unless I was forced to by unforeseen circumstances (no income, injury, etc.).

 

The interesting thing is that pretty much all refi's these days end up getting sold to Fannie and Freddie these days......so why would the banks care if Fannie and Freddie (who are in such a massive hole it's mind blowing) get an "upside" down loan?

 

Thats not true at all. Banks are simply not funding mortgages for properties with less than 20% owner equity, which negates the whole point of PMI to begin with as its only required if you have less than 20% equity.

 

I hate to break it to you, but we are well beyond those types of borrowers now. sure, those who did 0% down are really in a bad position now but whats worse, even those who had 20% + downpayments are ALSO underwater...the loss of value in most areas of the country has surpassed 20%....so your comments about irresponsible borrowers is totally out the window.

 

Fannie & Freddie write the guidelines for the loans that they will accept. These become the rules for what type of loans to fund. Loans that meet F/F guidelines are marketable. Most other loans are kept by the lender or portfolio loans and I'm not sure anyone is doing many of those these days.