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How to Refinance if you have a FHA Loan

Posted on October 2, 2015 · Posted in Connecticut Mortgage Refinance

Hello everyone, I am Michael with Northeast Financial in Middletown, Connecticut.  We are a Connecticut Mortgage Company that would be considered a Correspondent Lender as well as a  Mortgage Broker.  We only work within Connecticut and cover the whole state.  We have been in business since 2007 and really strive to give great customer service.

FHA Mortgage Loans are a great product in that they only require 3.5% down on a purchase and are ideal for first time home buyers.  But what do you do when you have had a FHA loan for a while and would like to refinance to get a lower rate or to get rid of your PMI?  You have two options when you want to refinance a FHA Mortgage.

Option 1 is to refinance the loan with a conventional mortgage like a 30 year Fixed mortgage.  Ideally you should have 5% equity or more in your property because this would allow you to do a Lender Paid MI program (meaning if you do not have 80% loan to value or under – you can still refinance and get rid of the PMI payments).  In some cases you may not have to do a Lender Paid MI program – if you owe 80% loan to value or less you can do a conventional mortgage with a really low rate with NO PMI all together.

Option 2 is to do a Streamline FHA Mortgage.  This will still involve you paying PMI but will lower your monthly payment.  Streamline mortgages do not require an appraisal (this is ideal for people who fear their property may be “underwater” – you owe more than the property is worth – being upside down on your property) and you can do them in 5 year increments (30 year, 25 year, 20 year, 15 year loans).  The Streamline works out great with savings for people that took out FHA loans a while back and are in the 4’s or 5’s and could really benefit from the historical low FHA rates now that are much lower.

Give me a call today and I am more than happy to give you a free consultation and discuss your refinancing options.

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Michael Meyer
Senior Vice President of Northeast Financial
NMLS#117875
Mike@northeast-mortgage.com
860-876-0572
210 S. Main St Middletown, CT 06457

NMLS#117273 

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FHA Disclosure

NMLS# 117273, Northeast Financial, 860-788-7237

The principal and interest payment on a 203,500 30 year FHA fixed rate loan at 3.25% on 96.5% loan to value is 1,025.99 with 0 points due at closing.  The APR is 4.491%.  Payments include a one time upfront mortgage insurance premium (MIP) at 1.75% of the base loan amount and monthly MIP is calculated at .85% of the base loan amount.  The .85% monthly MIP is required for a specific period of time regardless of your down payment or equity in your home.  The principal, mortgage insurance, and interest payment does not include property taxes or home owner’s insurance premiums, which will result in a higher actual monthly payment.  Rates current as of 6/26/17