Refinance Primary and HELOC into new mortgage or Not?

Question

Hi guys,

I have my primary with a mortgage that I owe $113K at 3.75% but it's an FHA loan and paying about $77 month on the FHA insurance that is for life. I also have a HELOC tied to this house, I owe 48K at 4.04%, so the low rates right now are keeping the HELOC payments decent. My estimation is that the house is worth about $260K, I got quoted from a couple of places to refinance and pay off the HELOC into a new mortgage at 3.75% (about $2,200 in closing costs), so basically I would have the same rate, have closing costs BUT I would get rid of the PMI (if the house appraises to the amount I think) and if the rates go up I won't have to worry about the HELOC going up as well.

Any advice if there are other options?

Thank you in advance!

Roy Gutierrez · Answer

Thank you for the response Caroline, yes, the HELOC has draws this year, fico just about 740, single family, my problem is my DTI is high, so we will see if they even qualify me. What bank is offering 3%? I'm in Michigan; interesting you mention October, do you think pre-election they will push the rates lower?

At the same time I'm trying to put a mortgage on my newly rehabbed investment property (this is the reason my DTI is high, used my money, CCs, HELOC to rehab the place, this property is clear of debt), of course this is #1 priority since this will get rid of all the bad debt, same issue DTI but supposedly a big chunk of the new loan will be used to pay off the debts right off the bat and will not count against my DTI, lets see if it goes thru, everything is a mess nowadays and takes SO long.

Caroline Gerardo · Answer

Depends on FICO score middle, property type... but getting rid of 1.75% in mortgage insurance is a great goal. You are considered a cash out add if the HELOC has any draws in past 24 months, does it? If not - if your FICO was 721 and property single family you should be able to get about 3% no points today. I would suggest you do 3.25 and use the half point to cover closing costs- you maybe maybe get an appraisal waiver depending on if records show.  Rates may even go lower in October... work on the FICO score by paying everyone on time, pay down balances to less than 68% of the line  This is not a commitment to lend, rates change daily, equal opportunity lender