Steps to Refi ? (refi ?'s)

[madladybride]

Ok, I'm a regular lurker and I have a rather dumb question. How you do determine if it's worthwhile to refinance and what are the steps to do it? (I'm pretty sure there are calculators out there) It's based on the amount of equity you have in your house, but that's related to how much similar homes in your neighborhood are worth, right?

Do you figure the above first and then contact a mortgage broker?

Basically, DH and I have an FHA loan. We bought our home for less than other, similar homes were selling for. It has increased slightly in value. Plus, our mortgage rate was 5.25%, and it looks like current FHA rates are close to 4.25%.

ETA: We have lived in our home for 2 years and plan on staying for at least 10.

Thanks!

[madladybride]

Thanks!

I thought you had to have at least 20% equity to be able to refinance an FHA loan?

[jenjen]

May 14, 2012 8:37:29 GMT -5 madladybride said:

Thanks!

I thought you had to have at least 20% equity to be able to refinance an FHA loan?

I don't think so. You could refi into another FHA loan however, last year the PMI monthly calculations went up so many people looking to refi would pay more for PMI and less in interest but it doesn't always make sense to go through with the refi. Also on the FHA loans we looked at, there was a minimum PMI of 5 years regardless of the equity so I assume your "5 year clock" would start over if you refi into a new FHA loan.

If you think you have some equity or cash you can put towards your mortgage, I would look into a 5% or 10% conventional. You'll pay less in PMI and our PMI was only for a minimum of 12 months. We're starting the refi process and I was quoted 3.875% on a 30yr conventional but I think we have 20% equity.