FHA streamline refi questions

[CreditCuriosity]

What are the mortgage pros thoughts on doing this?  Did an FHA loan about 1.4 years ago bought house for 304k worth about 320k now, owe 292k on it.. PMI is about 200 a month i believe.  I believe to qualify you have to save money being a better rate correct and believe rates are below 4% now?  I got 4.25 back then which was best at time.   My Mortgage scores are 750-780 range so not credit challenged(at least anymore ).

1) What are pros/cons ?

2) I would ideally like to do a conventional loan, but can't swing the 20% still thus looking at the streamline process

3) my payment is approx 2000 a month now, believe i might be able to get it to 1700-1800 with pmi, does that sound about right?

4) what fees are associated with a Streamline refi since appraisal isnt needed nor proof of income.  Do you have to pay the up front pmi chunk etc up front again being several thousands of dollars?  Has the PMI rates gone down or is that based on value of house, etc?

5) any other info that could help me.

Other thoughts wait another year or two so have 20% value (hopefully) in house assuming continues to appreciate and dump some cash in it and do conventional and get rid of pmi.

Advise welcome please.  Thanks

[NC_Mtg_Loaner]

Having to pay the UFMIP to HUD again is the biggest cost actually....while you are refunded an amount of your original (unused portion  of) UFMIP,  you will be charged 1.75% of the loan amount again.

The FHA Streamline is a rate/term refi using the original appraisal and its value.   

The lender typically offers you a 'slightly' higher interest rate in order to issue enough lender credit to pay their own fees (if any) and all the borrower needs to pay is the money to create a new escrow account.   As long as you save 5% in monthly payment, it's worth conducting the transaction. 

Keep in mind you are refunded your current escrow account and you can look at your current statement to see how much that amount is now and then add two months' worth to the current escrow balance to figure how much money you need to place in your new escrow account.   

[CreditCuriosity]

many thanks @NC_Mtg_Loaner whether to do or just do conventional i suppose is question and if fed lowers possibly .5 this year then rates "should" lower by that amount and should be able to get 3.5 approx by convention of fha refiance.  Think i will hold out and see what the fed does this year and hope for more of a rate reduction to make it worth it even more and hope for house to appreciate a bit more as well.

[NC_Mtg_Loaner]

Well, waiting can be similar to trying to catch a falling knife.....

Rates very well could go lower but that may depend on how long the recession lasts---I wouldn't expect it to be long at all though and personally figure you may have a 6 month to one year window before we see or realize any further changes.

With that being said, if your proposed FHA Streamline Refi is "In the money" (meaning a lender will pay enough of your closing costs to make it worth your while), I recommend taking advantage of that.     If your ultimate goal is to reduce PMI then there's no better way to be positioned for that next step than conducting the FHA SR now.   

Why?   

Well, because you ultimately want to eliminate PMI or do a conventional loan which you know relies on LTVs.   You aren't certain the appreciation is totally there yet, so you want to pay extra principle on this loan if possible.....lowering your rate with a Streamline refi will do this but more importantly you can take your escrow refund and pay it right back on your new loan which helps jump ahead on your amortization schedule for your future payments--   Just watch out for the increase  in the HUD UFMIP because if you fail to factor that into the equation you'll be overlooking that cost---something you don't want to do.

[VALoanMaster]

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@CreditCuriosity wrote:

What are the mortgage pros thoughts on doing this?  Did an FHA loan about 1.4 years ago bought house for 304k worth about 320k now, owe 292k on it.. PMI is about 200 a month i believe.  I believe to qualify you have to save money being a better rate correct and believe rates are below 4% now?  I got 4.25 back then which was best at time.   My Mortgage scores are 750-780 range so not credit challenged(at least anymore ).

1) What are pros/cons ?

2) I would ideally like to do a conventional loan, but can't swing the 20% still thus looking at the streamline process

3) my payment is approx 2000 a month now, believe i might be able to get it to 1700-1800 with pmi, does that sound about right?

4) what fees are associated with a Streamline refi since appraisal isnt needed nor proof of income.  Do you have to pay the up front pmi chunk etc up front again being several thousands of dollars?  Has the PMI rates gone down or is that based on value of house, etc?

5) any other info that could help me.

Other thoughts wait another year or two so have 20% value (hopefully) in house assuming continues to appreciate and dump some cash in it and do conventional and get rid of pmi.

Advise welcome please.  Thanks

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If your scores allow it, I would look at doing a conventional refi right now instead of a streamline refi. In eith case you're going to pay PMI (conventional) or MI (FHA) but the big difference is you have more options is how you pay the PMI & it will drop off once you have enough equity. FHA requires the MI for the life of the loan in most cases.

If you do an FHA streamline refi now, you're going to pay closing costs plus the new Upfront MIP (1.75%) now & then again when you refi out of FHA & into a conventional. Hence why I would do a conventional refi now. One more reason to skip the streamline refi & go straight to the conventional. There is no way to forecast what rates will do tomorrow, let alone 2 or 3 years down the road so better to get your self locked in now.