I recently met with the mortgage broker I used to finance my duplex with an FHA loan and asked if I qualified for another FHA because I just got married and also have a step daughter now. He said he thought they would still give me a hard time and suggested I just switch my current fha to a conventional then buy the next one fha and there should be less issues.
Does anyone have an opinion on this? I've never dealt with a conventional loan before. I read up on the requirements and I believe I have them all meet so that's not really the issue. I owe 92k appraised for 127, have great credit? I just don't know what the cons are. I also dealt like I met the requirements for another FHA having added two dependents and planning on another baby this year.
Thanks in advance, Tony
FHA doesn't have any requirements directly related to dependants that I'm aware of. Also as far as I know, you are NOT allowed to have more then 1 FHA mortgage... I didn't even think it was possible. Now maybe your wife could get a FHA in her name if your current duplex is only in your name? But that is well beyond my knowledge.
Conventional loan is fairly simple, FHA are actually more complicated from my experience. You would probably do something like 75% LTV on your duplex for 30 years, so no PMI. It will cost like $1-3k probably, but that depends on your broker. And then you should be free to purchase another property with FHA. Although I would check into what property you are wanting to purchase before you refinance. There might be other loan programs that could be almost as good as the FHA depending on your income, credit and location/etc.
Yes, increasing the number of dependents is a reason to qualify for a second FHA loan. You currently have a duplex, so you would get approved purchasing another Single Family residence, but going into another multi-family residence isn't proving that you need more space for the increase in dependents.
You would be better off rate and term refinancing into a conventional loan as you have enough equity to eliminate the MIP for FHA and avoid PMI for conventional and increase your cash flow on the property, if you plan on keeping it for any length of time. You should even have enough equity to roll in your closing costs as you would need 80% LTV on a primary residence. You could then purchase any FHA property, including a MFR without a problem or questions.
@Andrew Meyer the requirements I'm referring to are for getting a second FHA.
@Jerry Padilla I was looking at 3 bedroom duplex's for the second which is why I thought I might meet the requirement increasing a bedroom and sq. footage overall. But I'll just flip my current to conventional if it makes more sense. And thank you for the advice of added my costs into the refi. Thanks!
You may be able to if you increase the size of your unit and bedrooms, but it is still a savings to refinance. Let me know if I can help.
Well, I learned something new! I hope to refinance my FHA duplex in the future to remove PMI as well, since you can really save some money long term. Good luck.
Yes, refinancing an FHA to remove MIP and getting a conventional with below 80% LTV will help you avoid the PMI.