Is Refinancing Worth It?

[Sweets]

Hello. My first post! I've been lurking here for a few months and the info is priceless! Thank you!

So..here are the terms of my current mortgage

Current Terms
Primary Mortgage - 30yr fixed @ 7.5 ---> $ 688/mnth (P&I and taxes) Balance: $75K
HELOC - Interest Only --------------------> $ 100/mnth (fluctuates, last year at this time was $170) Balance $19K
Total Payments ----------------------------> $ 788/mnth Total Balance $94K


Refi Terms
1. Primary Only(FHA 25 yr fixed @ 5.0) --> $ 805 with $500 out of pocket & 6K in fees bringing my total bal to $101K
2. Primary Only(FHA 30 yr fixed @ 5.0) -->$ 756 with $500 out of pocket & 6K in fees bringing my total bal to $101K


With Option 1 the extra $17/month will eliminate 35 months of payments saving about $50K over the life of the loan.
With Option 2 my payments go down by $32 but I cut down on the long term savings...

Currently I have NO idea how long I will keep this home. It could be <1 year, it could be 30 years......

Question? Is it worth refinancing and increasing my mortgage balance by 6K? Is it worth it if I keep the home for another 2 years? For 15 years?

Oh and the FHA is my Only option to refi...and traditional refi won't work b/c it would be more than 85% borrowed.

[jIM_Ohio]

What is the current payoff plan for HELOC (if you do not refinance).

I would not put out 6k if you plan to sell within 3-6 years.
You owe 94k now, how did new balances go to 101k? What is house worth?

How far into the current 30 yr fixed are you?
option 2 looks to be $49 cheaper- where did the $17 come from?

I would analyze problem differently to begin with.
On current mortgage you pay $788/mo and will be debt free in 30 years (or replace the length with how far into this mortgage you are now). Guessing 25 or so years looking at your rate.

Then on refinance keep the same TERM- if you have 25 years and 2 months left on current loan, then calculate the payments to make the same length of time on the new loan. This way you are comparing similar payment schedules... if the new payment schedule saves you 8%, deal probably looks good.

I would be skeptical of closing with 6k in fees. Most I ever paid was 2k to close. Others here refinance with no cost.

[Sweets]

Jim - Thanks for the quick reply.

I have no payoff plan for the Heloc now. I hope to start paying xtra into it over the next few months. Right now I am just making the IO pymts.

The house is worth $105. The 6K came from fees - 4K in 3rd party fees, then another 1300 and another 1700 - I didn't write down what the last 2 were for but I think FHA loans have high fees?

I currently have 27.5 years left of the current 30 yr mortgage.

The $17 is the difference between the current mortgage($788) and Option 2 ($805).

How can you refi with no cost? I have Countrywide...I thought it would cost me more in fees if I switched mortgage lenders all together.