Should i refinance my home?

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Bought my home 2 years ago for 216,000. I owe about 211,000 on it now, i did a Combo loan 1st and 2nd mortgage, not sure if that was a good move or not. 1st mortgage rate is 6.125% at 162K and second mortgage rate is 8.875% at 54K. If i refinance i have to pay closing cost which will be like 6K, which will put me farther back than what i originally paid for the damn house (216,000) I just got offered 5% with one of those FHA Express loans , not sure if im gonna do it.
FHA Express: Rate is fixed. The payment on a $ 203,000, 30-year fixed rate loan at 5.00% and 80% loan-to-value (LTV) is $ 1174.33 with 0.875 Points due at closing. Payment includes a one time upfront mortgage insurance premium (MIP) at 1.75% of the base loan amount and a monthly MIP calculated at 0.50% of the base loan amount. The 0.50% monthly MIP will be paid until the loan reaches 78% LTV, provided the MIP has been paid for a minimum of 5 years. Thereafter, the monthly loan payment will consist of equal monthly principal and interest payments only until the end of the loan. Some state and county maximum loan amount restrictions may apply.

  1. Reply
    stephen t
    April 30, 2011 at 1:17 am

    I don’t know about magic guy poster #1 that has some secret technique, I would take it with a grain of salt. This may help. $ 6,000 sounds like a lot to pay for closing costs for 200K loan. I do not have a financial calculator, it would have helped if you had included monthly payments.

    Basically, take your total current monthly payment and subtract it from your new monthly payment. Figure out how long it will take to recover your closing costs. The quicker the time, the more compelling a refinance is.

    Another key factor is how long you intend to stay in the home. If you will move or sell in 3 yrs it probably is not worth it. If this is going to be your home for a long time then it tilts more towards refinancing.

    One last piece of advice, shop the loan with multiple lenders, get the best deal, and sho closing attorneys/title companies for lowest fees, and to save a little more coin ask for the re-issue rate on your lender’s title insurance policy:)

  2. Reply
    April 30, 2011 at 2:13 am

    With the info you provided, here is what I came up with.
    Your current payments should total $ 1,413.98 + taxes and insurance.
    Using the numbers you provided, your new loan amount should be $ 216 to $ 217,000.00 not $ 203,000.00.
    $ 216,000.00 + the upfront mortgage insurance premium @ 5% =$ 1,179.83 + the monthly mi of $ 90.00 = $ 1,269.83 + taxes and insurance.
    You save $ 144.15 per month which means you will need to stay in the new loan for 41.6 months to break even. Take the $ 6,000.00 closing costs and divide that by your monthly savings and you get your break even point of 3.46 years.
    Here are a couple of ways to speed things up.
    When you refinance you will skip at least 1 mortgage payment. Send that payment in and have applied to your principle. You should also receive a refund from your current lender for your escrow account. Do the same thing, send it to your principle.
    I hope this helps

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