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Good evening, my wife and I purchased a foreclosure home about 3.5 years ago. Locked in 3.5% for a 30yr fixed rural FHA (thought it was FHA but could be mistaken). Anyway last summer a big piece of vacant land went up for sale a block away and we bought it with a property loan at 5% for 15 years. We currently owe about 155k on our home and 40k on the land. Our house just was appraised at 230k with the repairs we have done, and the land when we bought it appraised for 69k. I'm just curious if there are any types of loans that are available to group both mortgages into one as to maybe not pay so much in interest. Ultimately we'd like to get our house paid down, land paid off, build A new house, And use our current home as rental income. Any advice would be greatly appreciated. Thanks!!!
Investors use a blanket loan to accomplish something similar, though I'm not sure I've heard of it being done to include a homestead. You'll want to include partial release clauses so you can pay one property off and have only the other as security for the loan. I'm also not sure they would wrap a single-family and bare land into the same product and actually save you anything in the long run.
I'd start with a small local bank and see if it's something they can help you figure out. And let me know how it turns out because I'm curious.
Sounds like you may be able to refinance your primary residence with conventional financing for a bit closer to $184k and still not pay any PMI (this will depend on a new appraisal though done through the bank doing the refinance). That is not enough to pay off both your loans, but if will help you get a little ahead maybe and pay down all but $10k of the land loan.
With a conventional loan, there shouldn't be monthly mortgage insurance which you are paying if your loan was originally financed with a USDA or FHA loan. Rates are around 4% now, so it may not be worth it unless they dip again down towards 3.5% which may never happen :-( A 20 year term will get you better rates and a quicker payoff with less interest, but it will be a higher payment of course.
The one upside of this is that it would move most of the mortgage interest expense over to your primary residence which should give you a better tax deduction now and when it becomes a rental if you end up doing that down the road.
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