The Federal Housing Administration provides a loan option to consumers commonly known as a FHA loan. This loan option allows you to purchase a home while putting less than 20% down, however it comes with a high monthly mortgage insurance. Homeowners who purchased in 2010 likely had an Annual Mortgage Insurance Rate around .55% of the original loan amount.

Unfortunately the FHA has increased their PMI (Private Mortgage Insurance) rates since then as they are now closer to 1.25% of the original loan amount. This rise in rates is particularly problematic to those who purchased homes when rates were lower and are now looking to refinance. It is likely that your current interest rate is higher than what you would be able to attain through a refinance, but the higher PMI may very well cancel out the potential savings. It is important, in this situation, to know the specifics of your loan (interest rate, PMI, etc.) and to call around to different lenders to get quotes. The purpose of refinancing is to lower your monthly payment and yet, because of variables such as PMI, that is not always possible. A lender will be able to take a look at your current loan and help you decide if there is money to be saved. Shop around and give us a call at RP Funding to discuss your options. One of our experienced loan officers would be more than happy to speak with you and help you make the decision that is right for you.