Investment Property Refi Advice

[Greg Watson]

Hi All, I'm looking for a little guidance on refinancing my long-term rental here in Bend OR. I've looked into a few brick and mortar lenders and haven't had anyone come close to the rates I can find through online options, specifically Better.com. 

This is a home that I had built in 2019 (completed that July) and financed through an FHA loan (it was my primary residence when I purchased it). At the time I didn't know there were low down payment options for conventional loans so learned a valuable lesson there. I already have a good interest rate at 3.5% but am locked into mortgage insurance for the life of the loan. Since this is now an investment property getting an interest rate in the ballpark of my current rate will be expensive, but assuming interest rates rise from here it still seems like it makes sense to refi to drop the MI as I'm paying a 211.89/month.

My current payment breaks down as follows: 

• P&I: 1406.50
• Insurance: 31.50
• Mortgage Insurance: 211.89
• Tax: 237.75
• Escrow Shortage: 241.49 (not really concerned about this as it will drop after a year, shortage due to paying tax on unimproved land only for almost a year after the home was built)

Total Payment: 2129.13

Total Typical Payment w/o shortage: 1887.64

Current Rents: 2300/month

Current loan balance ~303K

Current Home Value ~450K best guess, nothing going for less than that in Bend right now

Here are my options for rates through Better.com. The first option, highlighted in green, would cost me a total of 11,694 which I would plan to wrap into my loan (or at least most of it). My goal with this refi is to create cash flow/shed the MI while rates are low.

My questions are: 

Any reason not to pay more points to get the lower rate considering it won't cost me anything out of pocket and it will result in a lower payment/more cash flow? 

Is it dumb to add 10-11K to my loan just to drop MI and barely lower my P&I payment?