Q: What would be your best refinancing scenario to follow if you have equity in your house, but no out-of-pocket cash to cover closing costs? I want to switch from a 30-year fixed FHA to a 15-year conventional loan. The house appraised at $130K and I owe $95K never late and 760+ credit rating.
A: Provided your income is solid and you have the documentation to prove it, you should have no problem finding offers to refinance. You can consider adding the closing costs into the loan amount (extracting just a bit of your equity) or take a slightly higher-than-market interest rate and pay nothing out of pocket. Which choice works best depends upon how long you plan on staying in the home; use an amortization calculator to help determine the effects of a larger loan balance at a lower rate versus a higher interest rate over time.
