Question by Amy S: We have an FHA mortgage at 5.625% Is now a good time to refinance our mortgage?
I live in Allegheny County in Pittsburgh PA. The ultimate goal is to save money on our mortgage. We have owned our house for almost 5 years. I also hope to roll any closing costs into the mortgage. Any help would be greatly appreciated!!
Thanks!
Best answer:
Answer by Cold
Don’t re-finance unless you can get at least 1.5% cheaper.
Why do you ask?
Closing costs – they are a monster.
It will take you 5 to 7 years just to break even.
Also some people re-fi for a longer term which is a long-term financial mistake.
You just increase the debt you have in your home.
Your goal is to have a home paid off well before your retirement.
Google: Should I re-finance my home calculator
Do about 5 of them and take down notes.
Keep the term of the loan the same – don’t make it another 30 years.
And never consider signing an ARM or 5/5 or 5/1 – banks are still pushing these scam products.
———–
To save money, just make one extra payment towards your principal a year.
This will cut down a mortgage by about 7 years – great savings tool…
Give your answer to this question below!
It depends on how much you owe on your mortgage. FHA 30 yr. rates are averaging around 4.75%-5% right now. Use an online calculator to see if it may be worth it.
You need the loan amount and appraised value to say for sure but unless you are refinancing to a 15 year mortgage it probably would not make sense financially. You want to recoup your closing costs in a reasonable length of time and it is easier to do that with larger loan amounts. If you now have enough equity to eliminate PMI that would help.
Rates for monthly PMI on new 30 year FHA loans increased by about 60% a few months ago, so if you are refinancing to a 30 year FHA loan the increase in PMI would offset much of the savings you might get from the lower rate. Refinancing to a 15 year FHA loan will have no monthly PMI if your loan is less than 90% of appraised value. Conventional financing can be no more than 80% of appraised value to avoid PMI.