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Want to refinance FHA loan

I am interested in refinancing my FHA loan into a conventional.  Here are the stats:

1.  Purchase price - $535K
2.  Currently owe - $501K
3.  House value (zillow) $607K (est)
4.  PMI is $230 per month
5.  APR is 5%

  • December 11 2013 - Brea
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Answers (14)

Profile picture for Brea Expert
Check with your local bank then contact couple direct lenders, it all depending on what you're trying to achieve, if you need a more accurate home evaluation or a good lender referral, give me a call.

Thank you,

Jay Bourgana
[contact information deleted by Zillow moderator. Please see our Good Neighbor Policy for posting guidelines]
  • May 15 2014
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Yes, everyone below is correct. You need to sit down and figure out what your goals are. Is it paying off debt? Getting a lower payment? Shortening the term? The best loan program doesn't always mean a lower payment. If you can shorten your term or even refinance into a conventional loan and get rid of mortgage insurance and shorten your term it would be a better loan then just refinancing into a lower rate and staying with a 30yr term. Say you shortened the term and maybe your payment stayed the same or went up a little, you save tens of thousands of dollars on the back end!! I suggest you contact someone who can show you different options that would be available to you.

If you'd like I can go over it again with you.
Good luck!
  • December 19 2013
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There are many loan options that could help you, it all depends on your needs and your goals.  Would you like to cash out some equity?  Would you like to pay off the home as quicker?  When did you purchase the house and how long do you plan to live in the home?  These are some of the questions your mortgage professional should be asking you prior to choosing a mortgage. 
  • December 16 2013
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First, I recommend that you and your family sit down and really determine your goals for refinancing,

There is more to it than one might think.  

Most families refinance a home to reduce monthly payments.   And if that is your goal then you should be able to not only refinance but also restructure this debt.

In restructuring you will either move to a conventional loan or into 2 loans if available on your area.  The rate on a 30-yaear note alone won't likely be enough to cost-justify the move.

The new FHA Mortgage insurance will do the opposite...likely raise your overall payments even at a much lower rate, this, unless you qualify for the streamline...your Mortgage Professional can help you determine this.

Most of our clients find that moving the payments into a structure where you are not paying any part of the payment towards the FHA Mortgage Insurance should generate sufficient net-benefit to their families.

What if you could save enough over the next several years to pay for college?

If you onsider a 20 or 15-Year Fixed term you might just see the light on this.

If you can handle the level or higher payment you will save tens of thousands of dollars over the remaining term.  And usually shorter rates are available on these shorter term loans.

Or, consider a bi-weekly payment even on a 30Year term...these numbers can be astounding!


That's my 2 Cents.  Happy Holidays and  thanks for your Post.

Best,

RJS

  • December 16 2013
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It appears that you are very close to the 20% equity that is typically required to avoid all mortgage insurance related financing. But you may not need to wait.

Depending on how quickly you intend on refinancing and when you purchased the home, you could get into a 80/3/17 today. What that means is you may qualify for a new low rate 1st mortgage at 80% value, then a very small 2nd mortgage at 3% value leaving you with 17% equity. This would allow you to proceed today with no need to wait. It also means you would take advantage of today's low rates.

Please keep in mind that in order to use your homes current estimated value you will need to have been in this loan for at least 6 months.

Please let me know if you have questions or if I can be of further assistance.
  • December 16 2013
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Profile picture for funds2
Since you appear to have a 83% Loan to Value, getting a closer estimate of value would be first step.  If in fact the comps show value is closer to $620K then doing an 80% conventional refi would be a no brainer. It appears that you originated your loan 4-5 yrs ago and if prior to 5/09, the MI would be about same on a streamline FHA refi; and new rate would be similar so don't see FHA being a viable option.
If value is closer to $607K, the lower MI on a conventional 83% LTV, may not be worthwhile as rate likely to be higher than your current 5% APR (which if factual could represent 4.5% or lower actual rate).
  • December 12 2013
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Since you appear to have less than 10% equity, the easiest refinance option might just be a Streamline.  There would be no appraisal required and no income documentation needed.  A Streamline would allow you to reduce your interest rate down to today's lower rates on a 30 year fixed rate, or go with a shorter term (15) or a different program (5 Year ARM).  Depending on when you purchased the home, your mortgage insurance could stay the same as what you have now.  We can close these loans very quickly, and without any hassle.  Feel free to reach out for more information.  Good luck!
  • December 12 2013
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Have you been able to speak with a lender directly about your circumstances and desire for a refinance? This would be the best and most efficient thing for you to do. Don't be afraid to shop around and find some lenders can are willing to help you refinance. There are lenders like myself that would be glad to speak with you to help you get the refinancing that you need. Well I hope this helps! If you have any further questions or if you would like a loan, feel free to contact me.
Good Luck!
  • December 12 2013
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Have you considered a 5 year ARM?

Depending on your credit score, the rate is 3.0% today and the monthly P&I payment would be $2,112. I'm sure that would save you a ton of money over the next 5 years.

Contact me if you're interested.
  • December 12 2013
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Profile picture for Roseville Loan Guy
Hello and thanks for allowing us to answer your question. As mentioned there are a number of ways to look at this. FHA, Conventional, and a 1st/2nd combo loan (also would be considered conventional)....

FHA would most likely be the worst option, depending on when you got your loan initially (if it was before June of 2009 an FHA Streamline refinance MIGHT make the most sense), as the mortgage insurance will eat away at the savings. 

Conventional is most likely going to be the best, unless your credit score is on the lower end. Out of the Conventional options there are three ways to look at it (assuming you are not bringing any cash to the deal)....

1.) A new first mortgage replacing your current FHA loan
2.) A new first mortgage for 80% of the appraised value and a small second mortgage to cover the rest
3.) A new first mortgage at the conforming loan limit ($417,000) and a second mortgage to make up the rest of the payoff.

Scenario #3 would allow you to have the lowest long term cost (assuming you plan on owning the home long term) as is would have the lowest interest rate and also the lowest payment. You could look at using the savings you have from the current loan and use that towards paying off the second mortgage and then only have the much lower first mortgage payment, as it is based on a lower principal balance and a lower interest rate, for the duration. It may not end up being the best scenario for you but I would look at the numbers just to see how it looks so you can make the most informed decision for your future. 

Please let me know if I can help in any other way or if I may go over the numbers with you. 

Sincerely,
Greg Cowart

Senior Loan Consultant - 17 Years Experience
  • December 11 2013
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Profile picture for JustinLeffew
Orange County loan limit is $625,500 if I remember correctly. This would make your new loan high balance. Depending on credit, I can go up to 90% LTV with no PMI. Contact me through my profile if you would like me to take a look.

Certainly, doing a 1st with a HELOC 2nd is an option. If you are going that route, I would take the first down to $417k and the 2nd for the remaining. This will give you conventional rates for you first, which are generally better than high balance/jumbo.
  • December 11 2013
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You should certainly have some options.  Probably best option would be to get a 1st for 80% and small second to make up the difference to avoid PMI.  Are you looking to stay with a 30 year loan or looking to reduce term?

Feel free to reach out to me directly through my profile if you have any questions.

Best,

Bryan
  • December 11 2013
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For FHA we have to determine Net Tangible Benefit.  I'm more than happy to explain what that means and also go over non-FHA, fixed options.  You have more than one opportunity to reduce your interest rate and monthly payment.  Feel free to contact me so I can provide specifics for your review.
  • December 11 2013
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Have you had a chance to submit a quote here on Zillow? 
  • December 11 2013
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