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2 Refinance questions

I own a condo in Tinton Falls, NJ.  I bought it in Nov 2009 for $223,500.  I got an FHA mortgage and put 3.5% down, original mortgage balance was $219,451.  My interest rate is 5%.

36 payments into my mortgage, the balance is now $209,232.  P&I is $1178.06/mo.

My 2 questions:

1.  Can I streamline refinance at little to no cost?  It's my only option because I am underwater a ton.  Are there lender credit available for the upfont PMI or is that a pipe dream on my part?

2.  If I want to drastically lower my monthly payment, even with the increased mortgage insurance, should I look at a 5/1 ARM?  Is it a gamble, or because my current rate is 5%, could I realistically lock in around 2.5% for 5 years, then still get a break for 2 years after that assuming a 1% annual cap?  That would seem like a lot more principal paid off in those 7 years than my current rate.

Thanks,

Mark
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December 04 2012 - Tinton Falls
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Answers (2)

Agree with everything Justin said and would be happy to help out.  One thing to add regarding the ARM's typically our investors do not pay the premiums necessary to cover all of your closing costs whereas that is not a problem with a fixed rate.  Contact me through my profile and we can discuss further
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December 04 2012
Yes, you should be eligible for a Streamline, the downside if your new monthly MI will be more than double, which will offset some of your savings on the interest rate, however coming from 5% you should still make out OK.

Streamline will allow you to FINANCE the new UFMIP on top of your payoff balance (principal plus interest).   A common structure will be to finance the UFMIP and get a lender credit to cover all closing fees, and some/all of the impound account.   Usually you end up bringing less than one monthly payment into closing (and "skip" the upcoming payment).

For New Jersey, I would suggest you look up Joe Cafiero in the directory, he contributes regularly to Zillow and is well versed on Streamline.

With Fixed rates already so low, I would not advise the ARM but you could certainly at least compare the two side by side to make an informed decision.
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December 04 2012
 
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