My wife and I purchased our first property (a duplex) in September of 2018 using an FHA loan. We discussed the pros and cons of the 15 vs 30 year options, and decided to go with the 15 year. At the time, the difference in the interest over the course of the loan was very important to us. However, now our goal has shifted more toward increased cash flow. We have since bought a single family rental on a 20 year term, and have seen the difference that the extra cash flow can make towards new deals. We knew eventually we would refinance out of the FHA to a conventional to avoid the lifetime MIP. However, my question(s) are:
1.) Can you refinance from a 15 year FHA loan into a 30 year conventional loan? (To reduce the monthly payment)
2.) If so, can you do this without having 20% in the property? (aka would we have to wait until we have closer to 20% equity in the duplex?)
3.) Would this be a reasonable thing to do considering our desire for increased cash flow?
I'm aware that we would have to play for closing costs, an appraisal, etc, but am I missing anything else here? Any input would be much appreciated. Thanks in advance.
1) Yup, absolutely.
2) 15% equity will do the trick conventional, otherwise it would have to be another FHA.
3) If you're subscribing to "Cashflow is King," yes.
An independent wholesale mortgage broker will have a significant rate/fee advantage w/ FHA since by law in the wholesale (ie, not retail) channel, they can't set different (read: higher) profit margins on FHA compared to conventional. Friendly reminder that if you call 1-800-LoanDepot or 1-800-Quicken, you are by definition a retail customer, not wholesale, so you get their retail rate/fee combo.