Definitely the right thing to do. You will save both with the lower rate and the lower MI. A streamline will be easy. If you think you have some appreciation in that short of time or you walked into some equity when you bought it, you should at least compare with a conventional refi since your PMI would likely be lower and can go away unlike FHA's MI.
While many lenders still require 20% down on jumbo loans there are some that allow 10% down. You can also do a combination loan with a first and a second to avoid PMI and have the first mortgage under the jumbo limit. One thing to keep in mind if you go with the jimbo option is that you may be required to have as much as 6 months of mortgage payments held in reserve after closing. I'm here in the Atlanta area if you would like to discuss. Thanks.
Your best bet is to have your wife go ahead and refinance you off the loan if the plan is for her to keep the house. Obviously that assumes she can qualify on her own and that there is enough equity in the home that would allow you qualify. If that is not possible, the only way to not count that debt against you is to document your wife paying the mortgage on her own for likely a 12 month period.
His debt will not be considered in Georgia.
I am a local lender in Georgia and we go down to 580. There are extra requirements with scores in that range, but I would be happy to take a look for you. Michael McCollum
Some lenders - the one I work with is one of them only verify rent history if your score is below 640. It may be that it's a moot point if your score is above that number.
If you know for a fact you will sell in 2 years, it is doubtful that it makes good financial sense to refinance.
It should make it easier. Contract workers can be viewed by underwriters as not having stable income due to a contract expiring. That issue can be overcome by a history of contract work, but becoming a W2 employee takes the question off the table, so it should make loan approval easier.
I'm telling all of my clients to go conventional if they can come up with the 5% down. FHA's mortgage insurance is simply too costly if it can be avoided. Not sure why your rate would be a full point higher with conventional unless your score is pretty low. You may want to see what you can do to bring it up.
What kind of loan do you have: conventional, FHA, or VA?