Anyone do a FHA Streamline Re-Fi?

[Green Decals]

Wondering if anyone has refinanced their house with an FHA Streamline loan? After all of the mortgage talk on here today, I did some number crunching then called our mortgage company. I was planning to start adding an extra $200 a month towards the principle. We can refinance at 3.5% for 15 years (currently at 5.75% for 30 years, and are almost 7 years in) and it would only increase our payment by $100 per month. If in addition to that we added another $100 towards principle, then we would have it paid off 2 years early, or in 13 years. If we just add the extra $200 to what we are paying now and don't refinance, then it would take us 3 years longer and cost us $35k more than if we do refinance.

The loan officer told me that there are no closing fees with the Streamline and we don't have to go through an appraisal. It all sounds a little too good to be true, so I am wondering if anyone else has any experience with it? The only downfall I can see is the PMI will reset, but that is small potatoes IMO to the overall savings. It would cost us no more than $800 in PMI if we refinanced.

[bama]

I have a lot of friends who have done it, and its true. They can usually even get it done in 30 days. I thought ours was an FHA and got disappointed I have to do a traditional re-fi which is a lot harder.

[amcess721]

Why would your PMI have to reset? I thought it was based on the amount of equity you have in your house, not the amount borrowed... .... or in the last 7 years has the value gone down that much?

[Green Decals]

Originally Posted by amcess721 Why would your PMI have to reset? I thought it was based on the amount of equity you have in your house, not the amount borrowed... .... or in the last 7 years has the value gone down that much?

It can be based on equity, if we do an appraisal, otherwise it is 20% of the loan (22% automatically). So if we don't do an appraisal, which isn't required in the Streamline loan, then it is automatically removed once we pay down 22% of the loan. We can request it once we have 20% equity (based on the value), but they may require an appraisal. Based on the cost of an appraisal, it isn't worth it IMO. The PMI "resets" effectively because it is a new loan. So, 22% of the refi amount (current mortgage payoff) instead of 22% of the original mortgage amount. Again, no big deal, less than $800 difference total over the life of the PMI. We could very well appraise higher than we did when we purchased our home, but given the market it is not a risk I am willing to take. I will eat the $800 before risking having to bring thousands to the table at closing in the event that our home value has tanked.