FHA streamline refinance

[Richard Beatty]

Hello Guys, So I purchased a property in January of this year. I received a phone call today from the mortgage lender asking if I wanted to refinance with the Fha streamline. He said my rate will go from a 3.75 to 3.3 and I can save $270 a month.my My MIP is payed off.

I do not know anything about the streamline refinance. Is he trying to sell me on something or it is a great way to lower my mortgage? Thanks in advance.

[Donnersson Penna]

@Richard Beatty There are a few types of FHA Streamlines, one that requires Appraisal and in this case lender can roll all your closing cost, 1 month mortgage payment, and your escrow into the loan so you don't have to come with any money to closing, in this case you will miss one month mortgage payment and receive your current escrow balance from your lender within 3 to 4 weeks from closing. The negative side to this is that you are financing over 30 years and paying interest on it. You don't always have to roll in all the cost, you can choose how much you want to bring to closing.

The second is the FHA Streamline without the Appraisal, in this case you do not have a option to roll all the money in, you have to bring money to closing.

I am not clear when you stated that your MIP is paid off. on a FHA loan there are 2 types of Mortgage Insurance, one is called Up-Front MI and the other one is monthly MI. If you are taking a new FHA loan there is going to be a new up-front MI that equal 1.75% of your loan amount and will be added to your principal balance and you will have a new monthly MI.

What MI is your lender offering to pay for you, if any? Since you've been in the loan for a very short time it seam not realistic that they will save you $270 monthly unless you have a very large loan amount.