Should we refinance? FHA Streamline

[servin89]

I received a call today from my mortgage company, Freedom Mortgage. The person over our, my husband and I are both on the loan, loan said that we call get a lower interest from 4.75% to 3.75%, which would make your new payment around $1,156, which is a difference of $93. We just brought our house last year. I do not really understand refinancing that well, so I decided to come here and get advice. I was told it would be a Streamline refinance and they would pay the closing cost, all we would pay for is 2 months of escrow. Also, I was told they would possible get it closed by Dec. 14. Would it be a good ideal to refinance? I brought a car in April and I believe my credit score is around 680, but I am not sure.

I added this information, just in case it helps explains anything.

General Information

Original Balance                                          $ 160,538.00

Current Balance                                           $ 158,060.80

Loan Term (months)                                     360

Closing Date                                                10/23/2013

Maturity Date                                                11/01/2043

Interest Rate (%)                                          4.750

Monthly Payment                                         $ 1,249.23

Principal & Interest                                      $ 837.44

Escrow                                                           $ 411.79

[StartingOver10]

Usually how a 'lender' pays for your closing costs is one of two ways:  1) higher interest rate or 2) roll the closing costs into your loan balance.

Because the lender quoted you 3.75% (if that is accurate), I suspect they are increasing your loan balance.

I'm not so sure I would refi at this point especially if it increases your mortgage balance. Do you have anything in writing from them? Are you sure it is from your lender? Many lenders use that as a come on even if they aren't your lender. The only way to know for sure is to get the info in writing. Be cautious here.

[JuliaTN]

It depends on how long you plan to stay in your home (2-5yrs? likely not a good idea, 30yrs? probably is a good idea, somewhere in between? who knows without doing the math).

In all likelihood, the closing costs are going to be rolled into the new loan. Say, for instance, that your new loan balance with all costs and fees* will be $4,000 higher than it is now. Divide that $4000 by the $93/mo you'll save. If you plan to be in the house for more than 43 months then it MIGHT be worth it. Otherwise you should probably sit tight with what you've got. 

*Ignore the escrow stuff, those costs are going to be there whether you refinance or not.