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Refi From Fixed 30 Year FHA vs 5/1 FHA

I purchased my home in 2012 on a 7-year ballon with a local bank in Michigan (Note: had a foreclosure effective 8/2009) and had to opportunity to lower the rate substantially the following year via 30-year FHA fixed at 4%.  My lender has now come back and is trying to move me into a 5/1 FHA @ 3.34% for a net savings of approximately $50/month.  I don't believe it is a wise move at this time based on the potential impact of mortgage rate increases in the next 5 years.  I can't refi into a convential mortgage until 2016 with the foreclosure.  My LTV at this point is 82%.

Should I even consider the refinance into the 5/1?
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April 02 - US
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Answers (4)

business is tough to get nowadays... that is why your current lender is trying to get you to refi.   I'd be willing to bet that if you did this, the lender would call you back next year trying to switch you back into a 30 year fixed!   Just say no!
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April 02
The loan proposed by lender is borderline predatory. Keep your current loan and revisit for a conventional loan in 2016.
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April 02
Absolutely NO! For $50.00 savings per month? No way would that be a good idea.
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April 02
I would have to say no!  If your staying in your home long term the 30 year fix would be safe.  Why would they even consider a 5/1 ARM? 
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April 02
 
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