Can anyone help me refinance?

[zach347]

Ok I know refinancing is relatively simple (or should be) and I’ve done it before; so why am I having such a hard time now?

I purchased my home in DEC 2009 in SW Escondido for 500k and I now owe around 470K. I have an 30 yr fixed FHA mortgage at 4.625 apr (plus PMI).

I would like to get into a better interest rate but the problem is- even if I did refi at a lower interest rate- that the FHA has raised the PMI rate from .05 to 1.2 so even if I save a little money on interest I give it right back in the form of PMI (and sacrafice a little bit of mortgage interest deduction).
According to my research my home would have to appraise around 570K in order to have the 80/20 LTV ratio so I can drop the pmi altogether in the refi. Problem is- I doubt my house has increased 70K in value in the last three years. So, essentially Im stuck.

Dont get me wrong 4.625 aint so bad; However, if I do appraise at 570K I can refi at lower rate, ditch the PMI and save about 500$ a month. I dont qualify for HARP because of my date of purchase.

Do any of you loan professionals have any suggestions? Also, Im eligible for a VA loan and have a credit score of 780 but every time I talk to a lender about going the VA route there seems to be about 30000K worth of fees. I just dont understand.

Thanks in advance for any and all advice..

[HLS]

Refinancing is NOT relatively simple but you may not be stuck. Maybe you’ve been talking to the wrong people.
With a balance of $470K you will need an appraisal of $587,500 to have 20% equity(not $570k)

Only comparing the payment amounts is a HUGE HUGE HUGE mistake.

Historically 4.625% ‘ain’t so bad’ but in today’s market it is obscene.It is foolish to discuss averages.

If you don’t qualify, you have no option, period.
If you do qualify, you have the option of staying in a higher interest rate forever and wasting tens of thousands of dollars in interest
OR
Refinancing to a lower rate with the higher FHA MIP premium, that will go away some day, leaving you with a lower rate for the life of your loan.
(You can discuss the loss of deducting the interest
with your tax advisor)

How long do you plan on ‘owning’ the house ?
Willing to bring in any cash to bring down your loan amount ?

FHA is a disaster/train wreck.
If your house will appraise for $522K+ you may have
a better option IF you can qualify based on guidelines.

[zach347]

Wow, some really good points made there. I very much feel like I have been talking to the wrong people.

I doubt the house will appraise for 587,500$ but it may be worth a 400$ gamble on an appraisal just to make sure. Heck if it appraised for that amount this would be more simple, I just dont see that happening.

As far as qualifying goes it seems to me like I should be good to go. I have Good debt/income ratio and credit score. In short qualifying has never been an issue for me.

Point taken on doing the refi now and pay the higher PMI rate until Im able to drop the PMI altogether (a few years down the road). This is an option I have considered but I’m shopping around a little to see if I can finagle a lower interest rate and dropping the PMI in one shot.

I am intrigued by the statement “If your house will appraise for $522K+ you may have
a better option IF you can qualify based on guidelines”. This is the first time I’ve had this number tossed out there so I’m curious as to what those guidelines are and what this option is. I can probably come in at or above that 522K mark you mentioned.

Im not willing to bring in cash to bring the loan amount down. I’d rather put my money to work elsewhere.

Thanks for your enlightened response.
zach

[HLS]

Zach,
You’re welcome. I analyze mortgage situations all day long (and sometimes in my sleep) Some people have options, many don’t.

Without 20% equity you will not get rid of MIP/PMI.
Appraisals for loan purposes must be done as part of a loan application through a lender. Don’t waste money by paying for one on your own, it can’t be used for a loan. ANY appraisal is only the opinion of that appraiser.

I’ve dealt with all levels of educated people who are really confused about their situations and don’t clearly understand them. There is plenty of really bad advice out there and there is not ‘one rate’ that fits everybody.

Rates/pricing changes a bit every day and often intraday. Do you understand what you are ‘shopping around’ for ? Nobody honors yesterday’s pricing (or last weeks) unless it is higher than today’s.

I have sent you a private message. If you contact me I can explain your possible options to you.
If you qualify, you can get a NO COST loan and save $2500 +/- in interest just the first year, and tens of thousands of dollars over the life of the loan compared to what you have now.

[Author]

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