The difference between 3.65 and 4.25 is not that large. I wouldn't worry too much about, the PMI insurance is likely more expensive. Do the math of the difference and find out what you'll actually save.
The days of <4% interest rates are gone. We are all at the mercy of interest rate changes so don't get too attached to super low rates, it's more important to get competitive rates for the relative environment we are in. Be happy with 4.25% and lock it in before rates go up to 6%+
Originally posted by @Nick Ragland :
I bought a single family house in 2015 and want to refi my mortgage.
-Current mortgage is FHA at 3.65 interest. -I also have a co signer for my loan.
-I’m looking to get a conventional loan to drop my mortgage insurance that is costing 140/mo and take off cosigner.
My credit score is 690 and when I looked into refinancing a few months ago, 4.25% interest is what several mortgage brokers were quoting me.
What should I do??
Any advice is GREATLY appreciated!
The only real advantage here is getting the cosigner off the loan. You'll be saving about $30 per month. Your rate is 3.625 plus PMI (.85%) which is a blended rate of 4.475%
If you're just looking to pay this home off, then keeping the loan you have is best because after 11 years the PMI falls off and you have 19 years left at 3.625%
After 12 months of payments coming out of your bank account or checks in your name the cosigners DTI will not be affected. So, if they want to buy a home you just have to prove that you're making the payments.
You would have to consult a CPA, but the PMI is typically a write off as well. But talk to you CPA especially with the overhaul on our tax system last week.
Also if you can get that fico score above 700 and ideally above 720 your rate will be much better.
In conclusion I make a living off doing loans but in my opinion, it must make sense. If the cosigner absolutely wants off, then do it. If not the hold on. Either way get an experienced broker or loan officer to walk you through all your options so that you can make an educated decision Sir.
Alexander and Shaun,
Thanks for the reply! This helps me out a lot!