$425K FHA Closing Soon — Advice on Rate & Refinance Timing

[Patrick Cunningham]

Hi everyone,

I'm closing soon on my first property, an FHA loan for a $425K house, and I'm trying to figure out what interest rate I should lock in. My current options are:

• 5.625% → 0.375% adjustment fee at closing

• 5.75% → $522 credit toward closing costs

• 6.25% → $3,651 credit toward closing costs

I'm hoping to lock in by the end of this week. My plan is to potentially refinance into a conventional loan before the 12-month FHA occupancy requirement ends so I can buy another duplex next year with an FHA loan. I realize refinancing could cost a lot and I might not have much equity at that point, so I'm unsure if it's worth it.

Should I:

• Go with the lowest rate and pay the adjustment fee at closing, holding onto the FHA for now, then buy another property next year with a conventional loan?

• Choose a higher rate that gives more closing cost credit and refinance into a conventional loan within 18 months?

Longer-term, in year 3, I'd like to pull equity out of this property via a HELOC, though I've heard that may not work with rentals. I might end up refinancing again to access equity before buying a live-in flip deal.

My main question: Which rate should I lock in, and should I refinance soon to buy another FHA property, or wait to refinance until I can pull equity for a live-in flip?

This is my first property, so I’d really appreciate advice on which rate and strategy might make the most sense given my goals.

Thanks!