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ag1184 · Joined: 21 Dec 2008 Posts: 1 1.44 Dollars($)

I currrently have a 30 FHA fixed mortgage at 5.875%, is it worth me refinancing?...I have only been paying about 6 months on the mortgage so far and am unsure as to how long I will be staying in the house due to uncertainties with work, probably at least 3 years though. I have seen rates in the upper 4% range and unsure if the small drop in interest rate with the potential short term that I will be here if I would benefit from the refinance.

smithsussane · Posted: Sun Dec 21, 2008 7:52 pm Post subject:

Hi ag!

Welcome to forums!

Mortgage interest rates have fallen in the recent times. So a lot of people are planning to refinance their loan at better terms and interest rates. However, you have mentioned that you have been paying your current mortgage only for 6 months. I don't think you will be able to refinance your mortgage within such a short span of time.

Moreover you should also look out for a pre-payment penalty clause in your mortgage docs. If you find such a clause in your mortgage docs, it will not be a wise option to refinance the mortgage. If you do so, you will have to pay a penalty to the lender.

Feel free to ask if you have further queries.

Sussane

Guest

You do not note the balance of your mortgage. The larger the mortgage amount, the lesser of an interest rate drop that is necessary to break even on the costs in about 24 months. I other words, if your mortgage is $90,000, it probably does not make a lot of sense. If your mortgage is $417,000, it may make sense to refinance at 5% (of course, lower rate is better). Your mortgage is an FHA mortgage and FHA permits streamline refinancing at no cost and no appraisal. However, the reason it is no cost is becasue the lender pays the costs out of the new rate, so, you do not end up with 5% but you end up with 5.5%, but, no cost and your payment drops. FHA in many places are not that large, so, I 'm guessing a no cost streamline works or nothing works that makes sense. Whoever did the FHA mortgage, ask them if an FHA streamline at no cost to you works. It may not if the mortgage is not that large--not big enough to cover costs with an increase in rate to cover costs, yet, a decrease in rate from what you have to loower your payments.

banker0679 · Posted: Wed Dec 24, 2008 8:50 am Post subject:

Good Morning and Welcome to MortgageFit!

John makes an excellent point. We will need to know the balance to determine whether you will recoup the costs within 3-4 years. Don't forget that you will be charged a 1.5% funding fee again at closing. You will get a partial refund for the first time you paid it, but it still a lot of money.

Please keep us posted on your decision
thank you
Robert

gmakerley · Posted: Wed Dec 24, 2008 9:06 am Post subject:

my initial reaction is that based on your intent to vacate in a few years, it is likely not worth the trouble to refinance.

don't worry about a prepayment penalty, though - you stated you have an fha mortgage now.

yes, definitely the loan amount matters in this case. keep in mind also that you can always accelerate payments, thereby reducing your interest costs without the need for another closing.

Guest

I HAVE BEEN TRYING TO GET HELP WITH MY MORTGAGE PAYMENT WITH MY BANK (B OF A) FOR 3 YEARS NOW. AND EVERY TIME THEY DENY ME WITH A DIFFERENT EXCUSE. I AM VERY UNDERWATER ON MY HOME BECAUSE IN 2007 MY HOME WAS WAY OVER APPRAISED. I NOW OWE $197,000.00 AND ITS ESTIMATED VALUE NOW IS $64,400.00. OUR INTEREST RATE IS 6.5% WE HAVE GOTTEN RID OF EVERYTHING THAT WE HAVE WORKED SO HARD FOR (INCLUDING OUR HEALTH INSURANCE) JUST TO GET A LL RELEIF. WE DO NOT WANT TO LOOSE OUR HOME. WE HAVE LIVED HERE 18 YEARS. WOULD A STREAMLINE LOWER OUR PAYMENTS ENOUGH TO MAKE A DIFFERENCE?

adonis · Posted: Wed Jan 11, 2012 12:34 am Post subject:

Hi MELINDA,

If you don't have equity in your property, it will be quite difficult for you to qualify for a streamline mortgage. You can have a word with your local lenders in this regard and check out what they have to say in this matter. I will also suggest you to apply for a loan modification with your lender so as to get a reduced payment plan which will help you in saving your property.

gmakerley · Posted: Fri Jan 13, 2012 1:52 pm Post subject:

Melinda, your "local lenders" are not likely to be any benefit, particularly if you're struggling to make payments currently. The only solution in cases like that is a modification with the current lender. Bank of America has taken major hits for poor service in that vein, but they've also been put in the mode of reaching out to more borrowers as a result of that.

Keep talking to them, and insist that they work with you. Your equity situation is not good, but the bank isn't going to want to take in your property when it's valued so low.

Keep on them!

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