What's the best approach to refinance?

Question :

I've got a 6.375 APR loan with no points or PMI for 30 years fixed, that we got two years ago. The house was purchased for 260, but, is now valued by the county at 230 (I think it's probably worth more). I've been paying a lot extra for it and have it down to 236. We have excellent credit, but, only about 5k to throw in a refinance. Should I slow down on paying the loan off to build up equity to refinance or can I somehow refinance it now?

Answer :

Might your current loan include lender paid MI? Although, you didn't tell us your original loan balance, based on your purchase price, you are a little over 90% LTV. My guess is that either you have lender paid MI, or a portfolio loan.

If you have lender paid MI; you could very possibly qualify for a streamline rate reduction loan through your current lender. If not, a good loan structure for you might be a new 80% 1st mortgage, and a simultaneous 2nd mortgage, likely limited to 90% CLTV (Combined Loan To Value), so you can avoid MI, and save about 2% off the rate of your 1st. Another option would be a Rate and Term refinance with MI.

Date: : October 22