Should I Refinance/Restructure my Mortgage?
A couple years ago, I bought my first house through FHA at 3.5% down. At the time, I closed at 4.5% interest rate for 30-year fixed (which I think was really good considering my low credit score then). Also, because I put < 20% down, I had a PMI cost of .55 which is roughly $ 185 a month added to my mortgage payment --- which is also expected to cancel out once I reach the 20% equity line. In case you're wondering, my original loan was $ 410K. Recently, I noticed the rates are at all time low and in inquiring with my loan officer, he said that he might be able to get me a 3.25% 30-year fix if I refi. I then did a mortgage amortization spreadsheet which compares my original loan at 4.5% and the new loan at 3.25% and the savings in terms of interest are quite substantial (over $ 100K after 30 years). There is a tiny caveat with this refi and that is, because of the new FHA laws, the PMI has gone up from .55 to 1.22; which if I refi, I will end up paying around $ 405/mo on just mortgage insurance BUT I will be saving $ 350 a month on interest and principle which if calculated $ 350+$ 185 = $ 535 and $ 535 minus $ 405, I would still be saving $ 130 a month. Considering that I do plan to stay in my home for at least another 10 years or so to be able to recoup the refi cost, is it worth refinancing ? Please answer from your experience. I wished I had 20% down so I can go conventional but I don't have any of that.