FHA 20% Equity Refinance

5 Replies

Looking for some clarity to refinancing to eliminate the PMI on my FHA loan. I've talked to bankers and they have told me that once I have 20% equity I can refinance and the PMI payment will be done. My main question is to the specifics on how the bankers calculate that 20% equity. Since I've bought the duplex I have made improvements to the one side of the duplex that I currently live in, new windows, refinished floors/cabinets, fresh paint, etc, and I'm wondering how that would factor into the 20% equity in addition to the monthly mortgage payments. Thanks in advance.

Once you reckon you're ready, the Lender of your choice will arrange their own Appraisal (at your expense I believe, which I guess would be added to your new loan amount, or invoiced to you if re-fi declined. Or maybe they just make you pay up front for the Appraisal, either way). All the best...

Originally posted by @Tom Cramblit :

Looking for some clarity to refinancing to eliminate the PMI on my FHA loan. I've talked to bankers and they have told me that once I have 20% equity I can refinance and the PMI payment will be done. My main question is to the specifics on how the bankers calculate that 20% equity. Since I've bought the duplex I have made improvements to the one side of the duplex that I currently live in, new windows, refinished floors/cabinets, fresh paint, etc, and I'm wondering how that would factor into the 20% equity in addition to the monthly mortgage payments. Thanks in advance.

Lender will send an appraiser to look at the property, and will prepare a formal appraisal. The improvements you made is not a bad thing, but local market in your area  will dictate what your property is worth

Thanks for the advice! It seems like I just have to wait for time to do its work and have the appraisal done at that point.

@Tom Cramblit it depends on how much you have improved the property and how much your local market has increased in value. I was able to refi out of my FHA a year and a half after purchase with no extra money, but the market has been hot in my area and I made some key improvements so the house appraised high enough. Good luck!

@Tom Cramblit

How long have you owned the property? What are nearby comps? I essentially buy/refinance most duplexes I purchase since I renovate everyone of them and add equity. I do the BRRR method which is buy, renovate, rent, refinance. This allows me to often get most of my initial investment back out of a property to buy the next one which is a great tactic for newer investors to be able to afford the next property earlier instead of just saving up the next down payment. Connect and I can tell you more or trade an hour of consult for some architectural advice :-)

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here