Changing Mortgage Interest Rates

[Fast_Eddie26]

I've been considering refinancing to lower my interest rates. I currently have an FHA loan at 5%. The issue with refinancing to another FHA loan is the FHA PMI rates have increased and would negate any savings from the lower interest rates.

My house value seems to have gone up based on zillow and some comps in the area. This could make getting a conventional loan fruitful as long as the appraisal comes back at this increased value. I would have a lower payment and no FHA fees. I don't want to pay for an appraisal and have it come back low, which would result in a waste of 300 dollars.

My other option is to try and get my current lender to lower my interest rates. Is this something easily down? This would allow me to have enough equity to avoid the FHA fees at the 5 year mark of the loan.

Does anyone have any suggestions?

[sherylgray]

Try out loan from some Government institution and charitable organization. They have very low interest rates and premium is also quiet feasible. But you shouldn't be carrying any bad credit.

[Fast_Eddie26]

What government institutions and charitable organizations are you referring to? Thank you for your reply.

[Petunia 100]

FastEddie, If it were me, and if I felt I had the equity to make the conventional work, I would go that route and pay for the appraisal. FHA loans are so much more expensive than conventional loans.

You might consider getting a market analysis from a local realtor. It is not an appraisal, but will be a better estimate than Zillow. Some feel this is unethical as you are not actually thinking of listing your home. I will leave that for you to judge.

Sherylgray, there are no government institutions which write mortgages. Which charitable organizations do?

[siggy_freud]

Fast_Eddie,

That is pretty much what I did. I bought a home in 2011 with an FHA loan at 4.5%. I then renovated it and a little over one year later, saw rates going down again. When they hit 3.5%, I figured my home value had gone up enough I could get into a conventional loan. I originally bought the house for 100k, put about 11k into it, and the appraisal went from 110k to 135k, which was plenty for me to refinance. Dropped my payments from $735 a month to about $600 even (this all included taxes and insurance).

If you think you're close, it could be worth the appraisal. Don't be shy of talking to the appraiser and verbally justifying why you think its worth what it is. I had before and after photos, and walked around with the guy pointing things out. I then emailed him all the before/after photos (at his request). Think of ways to reach that 80/20 mark and save some money

[RickLeibo]

refi!

You should absolutely refinance if you are at 5%. There is no discussion.

[Fast_Eddie26]

Do you guys have any good sites to compare rates? I've tried Lending tree in the past but couldn't do much comparisons.

[parafly]

I was in a similar situation just a few months ago.

I had a conventional 30 year fixed mortgage with PMI at 4.875%. Housing prices improved in my area, and Zillow showed that I had an estimated 80% loan to value ratio.

I explored refinancing options and decided to take the risk of getting an appraisal for $400. The house was appraised at right around the same value as Zillow estimated. I refinanced to a conventional 30 year fixed mortgage at 3.5% and dropped PMI for essentially no closing costs.

[Fast_Eddie26]

I've spoken to a few companies, and it seems I can save quite a bit of money.

It will all depend on my what the appraisal value comes at, but from what I can tell it should be between 210 and 240. This is based off of some comps.

If my value comes in high I may be able to get a conventional loan with no mortgage insurance at 3.625%, which would be a savings of 290 a month. If the value is 210 then I would be looking at 200 bucks in savings a month.

I can also go FHA, but would be stuck with 190 for PMI for 5 years. But I would still save 130 bucks a month until then. The interest here is only 3.25%

I think I'm going to go conventional since my plan is to aggressively pay down the principal after my student loans are paid off.

[Slug]

Don't overlook the fact that you can influence the appraiser. At my last appraisal, I handed my appraiser the Zillow and Trulia data that supported the valuation I wanted. I also handed him my old appraisal (about 2 years old) to "help" him with his write-up. Not surprisingly, I got the appraisal and it was the exact number I wanted. The appraisal is a risk, but you can influence it.

PenFed is at 3.125% for a 30yr fixed right now. If it hits 3%, I'll pull the trigger. I'm at 4% now.

[Fast_Eddie26]

Well, I did get the appraised value high enough to justify refinancing. I'll be looked it with a 3.625% conventional loan. Excited as this will allow me to pay off other debt and then concentrate on the mortgage.

[Slug]

Congrats. Good move.