Refi FHA to conventional? Advice/guidance?
Hi BP,
I just purchased my first property on 3/31 of this year through an FHA loan. It is a duplex and I am living there now and going to start renovation very shortly. The house was appraised for 107k and I have a note on it for 100k. The property was in fair condition.. It had nothing to desirable inside the house, but the location is good.
My idea right now is to fix it up, (both units), to something a lot more desirable.. This way, when I move out, I can get more rent/unit and put sweat equity into the house. Now i'm wondering... If I could get the value of this property re-appraised for 125-130 through renovation (which I think is possible after seeing what it looks like as it is), would it be worth it to refi to a conventional loan to drop the monthly mortgage insurance payments?
My idea was that, if I could refinance through a conventional, I could increase my monthly income on that property, and use a new FHA loan on another property with 3-5k down again. This would make it very easy to get into a second property.. and perhaps repeat the process.
There are a few things I'd have to take into consideration: whether my renovation would bring the loan value/appraised value to 80%, refi costs, whether a bank would go for it, etc..
I plan on doing renovations regardless, since we are living in the property it will feel more like a home to us, and I could increase the rent income/property value at least some.
Let me know what you think! I don't know a lot about loans and stuff yet, but I am learning a lot as I go. All opinions and suggestions will help.
thank you!
Joe