Should I Refinance?

Should I Refinance?Should I Refinance?
Maximccv asked 4 years ago

I am considering refinancing my mortgage to eliminate the MIP I am currently paying.     Below is the info on the existing and new mortgage.

 

 

Original Purchase Price:  $ 265,000

Current Balance:  $ 243,742

Current Interest Rate:  3.875%

Current Loan Type:  FHA

Loan Orig Date:  04/17/2012

 

Principal & Interest:  $ 1,214.54

Homeowner’s Insurance & Property Taxes:  $ 473.48

MIP:  $ 233.91

Current Total Monthly Payment:  $ 1,921.93

 

 

Current Escrow Balance:  $ 1,898.32

 

Since this is an FHA loan the MIP will not drop until the balance is 78% of original loan.    Paydown needed $ 37.042.    ($ 265,000 * .78 = 206,700    >>>  $ 243,742 – $ 206,700 =  37,042)

 

 

 

 

 

 

Proposed Refinance:

 

New Loan Type:  Conventional – 30 year fixed 

Approximate Closing Costs:  $ 3,940.00

Approximate Cost of Prepaid Interest and Escrows:  $ 3,860.75

Total Approximate Cost of Settlement Charges:  $ 7,800.75   (Mortgage company says this will likely be much less at closing due to being an estimate of escrows.   Also, I should get a refund of escrow from from current mortgage company of $ 1,898.

 

Interest Rate:  4.125%

 

Principal & Interest:  $ 1,197.09

Homeowner’s Insurance & Property Taxes:  $ 413.85

MIP:  $ 76.16

Current Total Monthly Payment:  $ 1,687.10

 

MIP will drop automatically once balance drops to $ 234,000 – paydown needed $ 9,743.

 

Then monthly payment will drop to $ 1,610.94.

 

The proposal they sent me includes a refinance amount of $ 247,000 vs an actual current balance of $ 243,742.    So they have rolled some of the closing costs into the new loan balance in this scenario.  

 

 

 

I am disappointed that I can’t completely eliminate MIP but would I still be better off refinancing in this situation since I can drop MIP once my balance is paid down a little more?

 

Any advice is appreciated.

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