My wife and I bought our house in February 2010 using an FHA loan (3% down) which, of course, comes with mortgage insurance. Fortunately, since we bought at basically the nadir of the market, our house has appreciated some. As you may know, you can re-finance FHA loans after at least 5 years if your house has appreciated such that you have 20% equity. Both of these things seem to be the case with our house, so it’s time to shed that pesky PMI and also cut our payment due to very low interest rates.
My question is, just how do I go about doing this thing? Our lender sent us a notice that we can refinance, but I don’t want to just blindly use them when a better deal might be lurking around the corner. Does someone need to appraise the house to verify that we indeed have 20% equity? What about closing costs, fees, etc? Any help would be greatly appreciated!
In England I would not go to the bank because they will only recommend their own products. I would go to an independent broker who will work for a fee rather than commision.
I called the mortgage holder (GMAC), and asked them about refinancing. In half an hour, it was done. A week or so later they sent a guy to our house to sign all the papers, and, presto, my monthly payment is a couple of hundred less.
I could have shaved off a half point or so by shopping around, but it was so easy to do that it just made sense for us.
You can call up several banks or mortgage brokers and compare the rates they will give you.
The bank will require an appraisal, which you will pay for. Your other closing costs will include an origination charge (what you pay the bank to process the loan), a title policy for the new mortgage, title search fees, recording charges, and possibly a mortgage tax (depending on jurisdiction).