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Message
Advice about refinancing with rural development loan
Posted on 8/27/13 at 5:52 pm
Posted on 8/27/13 at 5:52 pm
Wife and I are expecting our second child, so I've been running through every expense to see where I can get a reduction here and there. One thing I was looking at was refinancing. Not looking to cash out, just lower my rate (the foremost goal being lower my monthly payment).
My current mortgage is a Rural Development Loan, 100% financed, no PMI, 30-year fixed 6.5%. I got this 5 years ago right after college. The loan was for $138,000. The house appraised for $145,000 at the time. I have paid $9,000 in principal so far.
I have no reason to believe the house won't appraise for at least that, but here's the offer I have:
3.625% 30-year fixed -- haven't had an appraisal yet, but apparently I'm going to have to pay PMI for the next 11 years. After PMI, I basically save $60-80 a month at best. The PMI kind of turns me off the idea because I'm not paying it right now. I don't suppose there's a way to refinance with the same type of loan I have now?
My current mortgage is a Rural Development Loan, 100% financed, no PMI, 30-year fixed 6.5%. I got this 5 years ago right after college. The loan was for $138,000. The house appraised for $145,000 at the time. I have paid $9,000 in principal so far.
I have no reason to believe the house won't appraise for at least that, but here's the offer I have:
3.625% 30-year fixed -- haven't had an appraisal yet, but apparently I'm going to have to pay PMI for the next 11 years. After PMI, I basically save $60-80 a month at best. The PMI kind of turns me off the idea because I'm not paying it right now. I don't suppose there's a way to refinance with the same type of loan I have now?
4
Posted on 8/27/13 at 5:56 pm to ILikeLSUToo
You can as long as your income is still low enough. I wanted to do the same thing last summer when 15 year rates were at 2%, but our household income was too high.
Posted on 8/27/13 at 6:27 pm to ell_13
What's the income threshold? I think our income has increased by about 75% in the past 5 years.
Posted on 8/27/13 at 6:57 pm to ILikeLSUToo
I'm not sure what the exact number is. Our mortgage guy just told us we were over. At the time, we were still looking at going conventional, but like you, we don't have enough equity to avoid PMI. Add in the closing costs and our plan to move in 5/7 years, and it's a wash.
Posted on 8/27/13 at 10:56 pm to ILikeLSUToo
quote:
I don't suppose there's a way to refinance with the same type of loan I have now?
The RD loan you have does not have monthly mortgage insurance included, however, since you obtained your loan the program changed, and now all RD loans do have the additional monthly payment.
Posted on 8/28/13 at 6:47 am to ILikeLSUToo
RD loans now have PMI for the life of the loan, not just until you get under 78% LTV. Make sure you take that into consideration.
As for income, a 4 person or under household has a Max income limitation of just under $75k (think the number is $74,750).
As for income, a 4 person or under household has a Max income limitation of just under $75k (think the number is $74,750).
Posted on 8/28/13 at 9:59 am to ILikeLSUToo
you just need to refinance into a conventional loan to avoid the PMI the rate will be higher but if you can avoid the PMI it will be a better deal in the long run.
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