Here's the pro's for going with the FHA loan:
- My monthly payments will go down about $75/month.
- We'll lock a lower interest loan while rates are low
- There are no closing costs or points required to get the rate I am qualified for
- Stuck with PMI even if I have a less than 80% loan to value balance remaining. The only way out of it would be to refinance again in the future when my credit is better.
- Bank of America requires a $400 deposit in case the appraiser does not value the house high enough. If they value it high enough that I can do the loan, I'll get the $400 back at closing.
There is also a very tempting option for us to look at, the HUD 203(k) loan. From my brief reading, it would allow us to pay for some improvements on the house (total must be at least $5K) and that will be added upon the refinanced loan. There are items we would like to do on our home (fix first floor flooring and put in hardwood, put tiles in the kitchen, fix the driveway, replace our fences) but are holding off so that we can build our business. I know when I started this blog I wanted to say goodbye to our debt, but this is something that I am struggling with.