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Is doing a streamline FHA refinance worth it?

I have an FHA 30 yr loan taken out in April 2011 with an iterest rate of 4.75% fixed of which the principle is $223,222. My monthly total payment is currently 1658.33 broken out as:
P&I: 1,179.54
Tax: 290.00
Insurance: 22.06
MIP: 166.73

I have talked to one lender and he said he can do 3.75% Fixed 30-yr Streamline FHA with no closing costs or fees - just an increase in the Upfront MIP of around $890 added to the principle. He said my montly payment would be around $92 lower than current. Seems like a good deal to me - but am I missing any hidden fees or costs? Will my current lender charge me fees to get out of their loan? He also mentioned that I should get in before April 1st when there's an increase in MIP rate (but I read online that's just for new, not refi). I am in TN.

Thanks for any help or advice! 
  • March 14 2012 - Nashville
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Answers (16)

Leroy, the changes about to happen are going to hurt him, not help. See Bob's post.  
  • March 16 2012
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New guidelines are coming out for FHA which could help you.  Contact a knowledgeable FHA lender in your area about this.
  • March 16 2012
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Yes, by all means, do it today.  Rush.  You will save thousands unless you are planning on selling this year or next then don't bother.
  • March 16 2012
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Yes, Clay has a good option if you definitely know you will be selling and you know that you will be in a position to sell. 
  • March 16 2012
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I only asked if you locked because mortgage pricing has changed in the last few days, wondering if you can still get the pricing they offered you. A 5/1 is an ARM, rate is in the low 3/s for the first 5 years, then the rate will adjust every year starting the 6th year. I would only recommend that if you are selling in a year or so, if you plan to hold the property and rent it then I would take the fixed rate.     
  • March 16 2012
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Don't think I've locked, the interest rate is but I haven't signed the application yet... Too late to change? What is the 5/1?
  • March 16 2012
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If you know you are selling in a year or 2, then you could double the monthly savings to about $150 using a 5/1. Did you already lock this loan? 
  • March 16 2012
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If you know you are going to move in the next year or so, I wouldn't do it.  However, if there is any chance you will stay in the home, it is a nice option.
  • March 16 2012
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Well guys - wanted to let you know what I've decided to go with. Due to my situation I decided to take a slightly higher rate (3.875) in order to get a larger lender credit. So the loan amount will go up to 224,782 (+803) and my monthly payment will lower $77/mo. and I don't have to take anything to closing at all, in addition lender said I will receive a credit back from MIP refund (and escrow credit I think?) totaling around $3363. Sounds like a good deal to me, what do you think? Thanks for the advice!
  • March 15 2012
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OP is moving out in a year or so and its a no brainer?
  • March 14 2012
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That's a no brainer! Make sure you get your application and FHA case # done before March 31st
  • March 14 2012
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The new FHA case number will need to be assigned prior to April 1.  The increase will take effect on purchase and refinance transactions. 

The insurance is being decreased on refinances with an FHA endorsement date prior to June 1, 2009 so you would not qualify for this reduced insurance.

Are you planning on selling this home when you move?  If so, I really don't think it would be worth refinancing.  While there would not be any closing costs, you would be charged a new up front MIP.  You would get a partial refund from the MIP you paid on the original loan, but it would still be over $1,000 increase.  Also, compare the proposed loan balance with the existing balance.  Do you want to take on that increase when your intention is to sell in the next year or so? 

  • March 14 2012
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If you will be leaving in 12 months, then it's not worth doing. You are paying $890 and will save 92/month so it will take 9.7 payments to recapture the increase in the loan balance. You will realize $211 if you sell in 12 months.  
  • March 14 2012
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Thats a bit of work to save $1k. Perhaps you should stay put then.
  • March 14 2012
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One other thing, I don't plan on being in the house much more than a year more. Not sure if this changes anything....
  • March 14 2012
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If that 3.75% is available today, lock it.

  • March 14 2012
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