Hey everyone. I don't post much but love reading the forums. I myself have a question regarding a refi I'm considering. I just recieved all the paperwork and the good faith estimate. Thought I'd give a little info and hopefully get some of your excellent advice. Im currently in a 30 year fixed conventional at 6.5%. Im looking to refi into 30 year FHA at 5%.
Here's some select info off the GFE
Intereste Rate 5%
Closing Costs approx 1800 (Are these reasonable?) Mortgage insurance premium approx 2800 (Not sure what this is?) Then also my property taxes, insurance, etc. approx 3500 Total in the reserve/prepaid is about approx 6700
My total est monthly payment on this Loan shows to save me about 160 a month. I save some in principal interest and also by having a lower PMI per month.
Under Transaction Summary on GFE
Current loan payoff approx 156000 Closing Costs approx 1800 Reserve/prepaid approx 3900 FHA funding fee approx 2800(Again, what is this?) Total Costs approx 164000
So my new loan will be 164k approx. I was told I will be mailed a check from old lender from my escrow account. With this new loan am I able to finance 105% LTV because of the Making homes affordable? I really need some advice. Both our credit scores show on the paperwork I have with the application as over 720. Also am I locked in at 5% since I have the GFE and application to sign correct? I believe I locked but not sure if that would be done now or later? Please any advice you can give me I would LOVE to hear. Or if you need any more info from me let me know.
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Closing costs may run anywhere from 2-5% of the outstanding principal on the loan - your GFE is definitely on the low end of that range. Typically, you can expect to pay:
1. Refinance Loan Application Fee. Expect to spend an average of $400 for an application fee with a range of $250 to $500. 2. Lender Closing Fee. The nationwide average for a lender closing fee runs roughly $725 to $750. 3. Settlement Fees. Tack on another $350 to cover common settlement fees. 4. Title Examination. Depending upon your state, title examination can range from $150 to $450. 5. Title Insurance. This varies widely from state to state and agency to agency so it pays to shop around but in general, expect to pay from $225 to $400. 6. Document Preparation Fees. These will run approximately $200 to $400.
The Mortgage Insurance Premium amount refers to Private Mortgage Insurance (PMI). PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.
NOTE: Congress has extended tax deductions for homeowners paying private mortgage insurance through 2010. Families with adjusted gross incomes of up to $100,000 can deduct 100% of their insurance premiums, much the same as they deduct property taxes. The deduction is then phased out up to an adjusted gross income of $110,000.
The FHA Funding fee ranges from 1.25% of the loan amount to 2.25% for higher risk borrowers.
The $2800 FHA funding fee/ upfront mortgage insurance is 1.75% of the base loan amount and can be financed (added to the base loan amount). It doesn't range from 1.25% to 2.25%; it's 1.75% for purchases and refi's or 1.5% for streamlined refi's (FHA to FHA with no cash out basically).
You will also have monthly mortgage insurance for a minimum of 5 years (it's not PMI, it's gov't mortgage insurance).
In terms of whether your rate is locked, you need to ask your lender.
I'm assuming you're going the FHA route because of the loan to value. On your current loan do you pay PMI? If not (and even if you do) I would check with your current lender to see if you're eligible to refi with Making Home Affordable and stay conventional to avoid the upfront and monthly FHA mortgage insurance. If you currently pay PMI, then look at both Making Home Affordable (if available) and FHA to see which is better.
Yes I do currently pay pmi of about 120 per month. With the FHA my PMI payment would go down to about 70 per month. And the savings by going to 5% from 6.5% would be approx another 90 bucks per month in Principal/interest.
So the 2800 for mortgage Insurance premium is the FHA funding fee? I mean they are one in the same? As I understand I have to pay that when using FHA in order to get the reduced PMI?
I guess I will call my lender tomorrow to ask about the Making Homes Affordable just to check it out before signing anything. Or I'll ask my mortgage guy about it as an option compared to the FHA.
Thanks for you help guys...any more advice I'm listening.
Anyone know what the maximum LTV allowed is on FHA refi? My new loan with everything rolled in would be right around 100% of market value. So would I have to come in with the extra money to get to 97% or are there some lenders that do lend without the 3% down? I told my broker I didnt have any cash to bring in right now.
Closing costs may run anywhere from 2-5% of the outstanding principal on the loan - your GFE is definitely on the low end of that range. Typically, you can expect to pay:
1. Refinance Loan Application Fee. Expect to spend an average of $400 for an application fee with a range of $250 to $500. 2. Lender Closing Fee. The nationwide average for a lender closing fee runs roughly $725 to $750. 3. Settlement Fees. Tack on another $350 to cover common settlement fees. 4. Title Examination. Depending upon your state, title examination can range from $150 to $450. 5. Title Insurance. This varies widely from state to state and agency to agency so it pays to shop around but in general, expect to pay from $225 to $400. 6. Document Preparation Fees. These will run approximately $200 to $400.
The Mortgage Insurance Premium amount refers to Private Mortgage Insurance (PMI). PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.
NOTE: Congress has extended tax deductions for homeowners paying private mortgage insurance through 2010. Families with adjusted gross incomes of up to $100,000 can deduct 100% of their insurance premiums, much the same as they deduct property taxes. The deduction is then phased out up to an adjusted gross income of $110,000.
The FHA Funding fee ranges from 1.25% of the loan amount to 2.25% for higher risk borrowers.
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