Good morning and thank you for writing. Your potential savings differ depending on the ultimate appraised value of your property, and on your credit report -- and also, of course, the interest rate you're offered.
With a $330,000 balance, your loan-to-value at a $385,000 value is 86 percent, and if your value is $485,000, your LTV is 83 percent. That's an important distinction, because you'd still be paying private mortgage insurance if you don't pay down your loan balance (cash in) when you refinance. And 85 percent if the cutoff for better rates.
YOur FHA MIP will go away when you refinance to a conventional loan, and that's a good thing. But your lender should also mention that PMI does apply, and its costs depends on your credit rating and LTV. For example, here's part of a price schedule from one national insurer, with several monthly payments that depend on your credit score and LTV:
FICO -- 760+ FICO -- 700 FICO -- 620
PMI 85.1 to 90 percent 0.24% 0.43% 0.87%
Pmt $330k balance $66 $118 $239
PMI 85 percent & less 0.12% 0.18% 0.39%
Pmt $330k balance $33 $50 $107
You could wait until you have 20 percent equity, but why? Conventional PMI is almost certainly less than your FHA premiums, and meanwhile, rates are rising. And unlike FHA MIP, PMI drops off once your loan balance falls to 78 percent. FHA MIP never goes away. What if you wait too long, rates go up, and you're stuck with MIP forever?
I would, however, recommend comparing offers from a few lenders -- easy to do right here. If your current lender is a good one (you did mention liking him), he should be able to compete with other lenders' offers. And if there is a much better deal out there for you, you should at least know about it.
Closing costs are all over the place, another reason to compare complete offers (preferably a Loan Estimate form) from several lenders. Studies show that comparing at least three or four saves typical families thousands at the closing table. It's always good to apply for a loan with open eyes.