FHA after already bought house?

Question

Hi,

This might be a real rookie question, but here it goes.

If I just bought my first house a few months ago before I knew the slightest thing about RE (not that I know much now either), and put down the usual %20 which was most of my savings as I had no plan of investing since I knew nothing of RE.  But now, with hopes of buying my first REI property, and now knowing of the concept of FHA, I realize I should have done an FHA loan and put down something closer to %5 and used the rest for an investment property.  So the question is, is there anyway to refinance or change the loan somehow (again i probably sound so ignorant here) to an FHA and somehow get back some of my money down?

Or any thoughts on how to somehow recover some of my down payment money to use as an investment instead?

THANKS!

Wayne Brooks · Answer

Daniel, don't do it, don't change anything.  You'll also have additional closing costs, fees, etc.  Wait til you save the money, or get it some other way.

Jesse Gonzalez · Answer

@daniel rubenstein

I don't fully understand what you mean by loan to value. Do you mean that if put down 20% of the value of the house, and took a mortgage on the rest, that the amount of money the bank loaned to me is 80% of the value of the house. So if I were to refinance to an FHA the bank would only loan me another 5% of the original value of the house? so on a 100,000$ house I would only be able to borrow another $5,000?     Yes

Also, what do you mean the mortgage insurance can be dropped off of an FHA loans? Meaning I only pay PMI for 132 months, and then they "trust me" for the rest? Meaning that the mortgage insurance will carry for 132 months and then it drops off.  There's no issue with trust, at the point of 11 years you'll have greatly paid down the principle balance and there is no risk to FHA paying out an insurance claim.  Remember that the insurance is not for your benefit, it's insuring against loss to the lender.

Also, (sorry for so many question, but you seem extremely knowledgeable), what do you mean that HELOCS are difficult to get over the 80%. Do you mean I can only borrow against my exact equity of 20%? or that the bank won't loan me more after I just took out an 80% loan? You're right on the money, typically lender's won't give a Heloc above 80% loan to value, I'm not saying that it isn't there, I just don't know of anybody doing it.

Sorry if I sound so ignorant. But I literally just learned the concept of real estate means more than buying a house to live in like 3 weeks ago (slight exageration) No worries, we all learn by asking questions.

And, since you burst all my bubbles here, do you have any ideas on how to recover some of my down payment? or should I just take the route of "starting from scratch" with "typical" creative financing options? You can purchase a new primary residence and get an FHA loan with as little as 3.5% down payment.  I don't know your area, but maybe you can get a USDA loan for 100% loan to value, no down payment requirement but income restrictions are present with these loans.  If you buy a new primary residence it will need to be better than your current primary because lenders will think that you're trying to buy a rental home.  It needs to make sense and you need to move into the new home as well.

Thanks again Jesse!!

Jesse Gonzalez · Answer

@danny day

I am, here's the table, sorry for the formatting but I can't copy and past the mortgagee letter from HUD dating to the april change. It's not a "one size fits all" change, it depends on LTV's and Loan terms.

Term LTV (%) Previous New

? 15 yrs ? 78 No annual MIP 11 years

? 15 yrs > 78 – 90.00 Cancelled at 78% LTV 11 years

? 15 yrs > 90.00 Cancelled at 78% LTV Loan term

> 15 yrs ? 78 5 years 11 years

> 15 yrs > 78 – 90.00 78% LTV & 5 yrs 11 years

> 15 yrs > 90.00 78% LTV & 5 yrs Loan term

Jesse Gonzalez · Answer

@danny day

I am, here's the table, sorry for the formatting but I can't copy and past the mortgagee letter from HUD dating to the april change.  It's not a "one size fits all" change, it depends on LTV's and Loan terms.

Term        LTV (%)                      Previous                       New

? 15 yrs    ? 78                           No annual MIP              11 years

? 15 yrs    > 78 – 90.00         Cancelled at 78% LTV    11 years

? 15 yrs > 90.00                    Cancelled at 78% LTV     Loan term

> 15 yrs      ? 78                     5 years                              11 years

> 15 yrs > 78 – 90.00            78% LTV & 5 yrs              11 years

> 15 yrs > 90.00                     78% LTV & 5 yrs              Loan term

Jesse Gonzalez · Answer