Hi this is Jim Ryan with Team Get It Done. Happy Cinco de Mayo and a quick refi update!
So, I have a current client who is 7 months pregnant (well they are 7 months pregnant), and they have a baby that will be born in July. They currently have an FHA loan that has a balance of $160,929. They have a FHA interest rate of 4.5% and a mortgage insurance rate of .85%. So the combined total of interest rate and PMI is 5.35%. Their total monthly payment is $1257 per month.
They have several options, but I’m just going to show you three, so you can get an idea of how you can save money and apply it to your personal situation.
Before I do, I just want to preface this by saying: they’re going to skip 3 monthly payments effectively in their checking account. How does that all work? I’m going to tell you in a minute.
Option #1 is a conventional refinance. So their house has appreciated in value to the point where they don’t have to pay PMI anymore. Which is awesome! So we’re going to take the same loan amount, apply a 4.49% interest rate, no PMI; that amounts to $1085 per month. They would need to show up to closing, though, with $3700, and that’s a little bit more money than what they were willing to spend.
So they actually ended up going with the next option, which is a conventional refi plus. We call it “plus” because we add the cost of the refinance to the loan amount, making it $164,829. Same interest rate, no PMI, $1105 per month. But now they show up to the closing and get a check back for $188.
The next option, which they wanted to do but eventually decided to the the refi plus, is the refi par plus. So what we do is increase the loan amount to $162,829, $2000 less, increase the interest rate, apply lender credit. That will increase the monthly payment to $1132, give cash back of $201. But the loan amount isn’t nearly as high.
With all three of them, you skip three monthly payments. So what happens is they’re going to make their first mortgage payment in July. This is going to be after skipping May and June’s monthly payments. And by July, you will be getting your full escrow account balance back. They actually have a little bit over $1100 in their escrow account, so they’re getting about one monthly payment being credited back to their checking account by the time of your first payment. So effectively you skip three payments, and then the payment after that is about $100 less. So that’s really cool!
If you’d like to check this out for yourself, I’d really encourage you to. I promise I’m not this silly without a sombrero on! But you can head over to the Apply page. Thanks so much for watching!