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Wife and I are buying a new home and we have just enough cash to cover our closing costs on an FHA mortgage. Once we have the mortgage and are in the house, how quickly can I refinance if rates go down? I would also want to refinance to take advantage of any equity in the house (by appraisal) so I can drop the PMI. This would assume that my $265k home appraised at $318k.
Also, what happens if the appraisal comes through high enough during the initial purchase to show 20% equity....does FHA drop the PMI, or is still required?
Location: central, between Pepe's Tacos and Roberto's
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That won't happen on an FHA loan. You must pay the MI (it's not PMI as it's insured by the government, not privately) for a minimum of 5 years, or until the loan is paid down to 78% loan to value based on original purchase price, whichever is longer. There are no exceptions and it doesn't matter how much equity you have.
That being said, you could look at going from an FHA to a conventional loan if you had 20% equity based on a new appraisal.
That won't happen on an FHA loan. You must pay the MI (it's not PMI as it's insured by the government, not privately) for a minimum of 5 years, or until the loan is paid down to 78% loan to value based on original purchase price, whichever is longer. There are no exceptions and it doesn't matter how much equity you have.
That being said, you could look at going from an FHA to a conventional loan if you had 20% equity based on a new appraisal.
Ok, that clears it up. How quickly can I go to a conventional, assuming the value went up? Lets say in 6 months the market heats up, can I refinance then?
So long as you can find a lender that is willing, you could in theory refinance over and over.
From a practical standpoint it rarely makes sense to pay the fees of refi until at least a year has passed, and the payment history standard that the FHA sets for streamline refi (from one one FHA loan to a new one at a lower rate) is also used by most conventional lenders -- 12 months minimum. http://fhaloanadvice.com/fha-streaml...anuary-1-2009/
I suppose if you bought a real bombed out fixer upper there is some chance that you'd see enough change in price to where a very quick refi might be a possibility, but that assumes that you have a nice pile of cash for fixing the place up, and that might not be the case...
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,845,674 times
Reputation: 958
Quote:
Originally Posted by chet everett
So long as you can find a lender that is willing, you could in theory refinance over and over.
From a practical standpoint it rarely makes sense to pay the fees of refi until at least a year has passed, and the payment history standard that the FHA sets for streamline refi (from one one FHA loan to a new one at a lower rate) is also used by most conventional lenders -- 12 months minimum.http://fhaloanadvice.com/fha-streaml...anuary-1-2009/
I suppose if you bought a real bombed out fixer upper there is some chance that you'd see enough change in price to where a very quick refi might be a possibility, but that assumes that you have a nice pile of cash for fixing the place up, and that might not be the case...
I did not bother reading the link but that info is incorrect. You do not need 12 months of payment history for an FHA Streamline. The 4155 does not outline a minimum time frame one must hold a mortgage to streamline refinance it. Lenders may have a certain set of guidelines, I know my company won't originate a streamline without 4 months of payment history, but that is just another example of lenders instituting tighter guidelines than FHA which makes every question dependent on who the lender is.
That being said, going from an FHA into a conventional you will need 12 months of title seasoning before most lenders will be willing to use a new appraisal as opposed to the original purchase price.
Hi.
Anyone know which bank have quick refinance facility..
With most wholesale lenders it will take about 3 to 4 weeks to close a loan. I know a few people in retail banking who have said it takes them months to close a loan due to huge volume of business. Not bashing retail banks as i am sure there are quite a few who do not take as long.
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