If you originated your FHA loan after April of 2009, and you want to refinance I would recommend you consider using a conventional loan.
Here’s why…
Even if your rate is 4.5% or higher it just doesn’t make sense to use an FHA streamline to refinance in cases where loans were originated after April of 2009.
The new higher FHA monthly MI (mortgage insurance) and up front MI (added to the loan at closing) take the streamline refinance out of play.
Take a look at this chart comparing an FHA refinance to a Conventional refinance. The chart is assuming the borrower has good credit, and is for a 30 yr amortization.
| Loan Type | FHA | Conventional |
| Balance Refinancing | $100,000 | $100,000 |
| New Rate | 3.25% | 3.75% |
| Monthly MI/PMI | $104 | $55 |
| New Up Front MI | $1,750 | $0 |
| New Loan Balance | $101,750 | $100,000 |
| New Principle, Interest & MI Payment | $547 | $518 |
Notice that even though the rate is a bit higher on the Conventional loan the aggregate payment on the refinance is lower than FHA.
This is due to a lower monthly MI and no up front MI on the Conventional loan.
So, if you are currently in an FHA loan and you want to lower your rate and payment – consider a Conventional loan.
…in fact, call me or email me and I can get you some numbers on it!
That’s it for today!
Brett
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