I would like some advice on what to do with my finances at this point - if I should do anything at all.
Currently, I have a SFR which gives me around $300/mo cashflow on an FHA loan at 3.25% interest rate. I have $15,000 in available funds right now. In order to purchase a home with the least down, I would have to get another FHA loan and refinance my current SFR into a conventional loan. The problem with that is it would consume all $15k (and some change) to get me to the lenders required 25% equity in order to refinance.
The benefits of refinancing I can see:
(1) More monthly cashflow
(2) Available FHA financing possibility on my next purchase
(3) Potentially faster monthly saving toward the next down payment.
(4) Waiting until after tax season will approve me for more because this year will include rental income for the first time.
The drawbacks so far:
(1) Back to $0.00 funds available for a down,
(2) Waiting until after taxes are filed (and received... potentially 6 months) to get serious on buying again,
(3) Higher interest rate on a conventional loan
(4) Paying closing costs and other fees add up to around $5-6k. Seems like a waste.
I'm sure there are more benefits/drawbacks, but I can't think of them. Does anyone have input for my next move? Real estate CPA advice? Getting a move on things sooner gets me closer to my goals sooner. But I also recognize that waiting might be more advantageous at times. Is this one of those times?
I appreciate any feedback given.
Why not purchase another home with a conventional loan? FHA is not really the way to go anymore. You'll have to put an extra 1.5% down for a total of 5%, but there is no upfront MIP fee of 1.75%, the monthly mortgage insurance is less, and your not stuck with the mortgage insurance for the life of the loan. While conventional rates are usually higher, the overall payment us usually lower because FHA's MIP is so expensive.
@Joe Impagliazzo I forgot to mention my next purchase was supposed to be a triplex/4plex. They will only accept 20-25% down for that. I suppose I could rethink it and go after a duplex or SFR. I do have excellent credit and can get the lowest interest rates... However, i definitely think FHA has a major role in purchasing properties that otherwise would require 20% down. I don't intend on waiting to save the money and would rather get into more units faster.
There is a piece of paper from a fortune cookie posted in my area where I work. It reads, "Be prepared to modify your plan. It will be good for you."
I think I can do this!
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