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)
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.