FHA mortgage loan

5 Replies

Good morning BP,

I have a question about my current loan. 

I purchased a home about 6 months ago via a FHA loan. I have received a notice about having my PMI reduced or removed. Good news to me up front.

I recently found that real estate investing is something that really interests me. Mainly rental income properties for long term purposes. I am full time employed in retail so I am currently saving 10% of my salary to start purchasing homes at he end of he year. 

My question is should I try to refinance my current FHA to a conditional loan or stay in an FHA? I plan to have about 8500 at the end of my savings plan which should be around November for my first rental property. I have heard that I can have 1 FHA loan at a time and may want to use that process to get my first income rental property. Am I making any sense? New to all of this as my first home purchase 6 months ago was the first time I was exposed to any real estate experience.

Any help would be greatly appreciated. 

You might be a little confused. You didn't "receive any god news about eliminating your MIP". The only way you can do that is to get rid of that loan, which means refinancing conventional AND you'd have to have 20% equity, and qualify for conventional standards. And of course you'll probably have $2-3k in refinancing costs.

So the communication of reducing my MPI would still be a refi scenario basically? Anything to reduce my monthly mortgage would be helpful.

What you most likely received was a solicitation from a mortgage company of some sort. FHA Mortgage insurance premiums were greatly reduced recently and many mortgage companies have been sending mailings to people who have FHA loans currently. They pull from public records. They are trying to get some refi business by using the mortgage insurance reduction as the opening and then offering the person an FHA streamline refinance or conventional refi, with lender paid mortgage insurance or if enough equity, conventional with no mortgage insurance. Some soliciations have been known to appear as if it came from FHA. If you bought six months ago, you most likely got a decent interest rate and it would take years to recoup refinancing for any reason. You could consider eventually renting your current residence and moving into another one. That way you get a better interest rate since the home is being bought as a home to live in and you could use the new 3% down conventional loan. Otherwise down payment requirements are much higher for investor property. (unless you did some creative financing of course) Hope this helps, if not let me know.

When I purchased my home I am in now my monthly payment became 1500 a month. I probably can't rent for that much. I would consider trying to rent it though, just what would be a good way to move forward at this point?

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