Reply #20: Ok, let's see...

[Captain Angry]

Your credit score will not reflect anything about your illness. (I hope you get better.) :-)

The FHA was only the way around having to pay mortgage insurance. You won't have that problem since you'll have so much equity in your home for the refinance as well.

Making up numbers, let's say your original 30 year mortgage was $100,000. You've payed down 10 years of it, which was mostly interest. You're probably down to $80 or $75K left to refinance from that original $100,000. Your home has probably gone up in value to $150K, so you'll still only be financing 50% of the value of the home.

I think you'll be fine.

Just be very firm. I want a fixed rate loan. I want to know what fees will be charged as far as points/closing fees. I will not sign anything that has a prepayment penalty.

So, there shouldn't be much negotiation involved. You'll go in, they'll pull your credit records and your deed information from the current holder. They'll pop it into a spreadsheet and tell you what your new mortgage payment would be. According to bankrate.com, it looks like the national average for a high quality fixed rate 15 year mortgage will be in the 5.5% neighborhood.

You should ask the potential lenders to whom you speak, to calculate the amount you'll spend with their loan (including all fees) and have them compare it with you staying in your remaining 21 years at the higher interest rate. You could just pay down the 21 years sooner by adding payments directly to the principle. If you do that, you are paying more interest in the mean time, but you're not paying fees to cut interest.

I mean, if you spend $3500 or something to refinance your loan, and it's only going to save you $4000 in interest, I don't know if it's worth the hassle.

The nice thing about keeping the current loan and overpaying is that if you find yourself in a month or two where you would prefer to not send extra, you don't have to. But if your payment increases because you're locked into a 15 year loan, you're stuck.

Just some thoughts. :-)