Refinancing a (somewhat) new loan
Some of you may have read my previous post about turning my current home into a rental. It looks like refinancing my loan may be the best option to turn the property into a profitable rental by lowering my monthly payments. I have researched a bit and have a few questions. So, here is my situation.
My loan was for $209,000 at 4%. It is ably about 18 months old. It is an FHA loan. I currently owe about $200,000. Refinancing at a lower rate with a somewhat smaller loan would decrease my mortgage slightly, roughly $100. The home has drastically appreciated and could be appraised at $250000. My thoughts are that if I refinance, I could do away with my $200 PMI due to the fact that I could have 20% equity in the home now. My concern is that it could appraise less than $250000 and would defeat my purpose of refinancing. How far into the process is the appraisal? If it is the first step, as far as payments go, I would be willing to pay for it. I would hate to begin paying fees and have the house appraise for less. Also, is the lack of time I have put into my current mortgage a problem? Finally, how should I go about this process? Is there any way to keep the refinancing fees down like working with a bank as apposed to a broker or vice versa? Thanks for any input.