I am thinking of getting a streamlined FHA 203k loan for a home. The loan is for $101,300. The best offer I could find is 4% interest, but because of required insurance fees, I would pay $630.13 a month for 360 months. In the end, I will end up paying $226,846.8. I was told that after a year I could refinance to a conventional loan with a lower rate (currently at 3.75%) and ditch the mandatory FHA mortgage insurance fee (currently $113.05).
Assuming the interest would be lower than what I have now 4%, hopefully staying at 3.75%, would it be wise to refinance after a year so I can loose the $113.05 required mortgage insurance fee and hopefully lower my monthly payments or just keep the loan as it is. Since I guess the new refinance will take into account the original loan amount plus the interest. Please correct me if I am wrong. There is a $25 Hazard insurance fee in the monthly payment which I doubt I can get rid of.