Refinancing a THDA FHA
I'm not a Lender, but I've had experience with this with a past client. First, check on the FHAs website and see if they have a time length that the loan must be kept. I haven't looked for 2017. The rules change year-to-year, so if it is not listed on their website, you must go through your old loan docs and see if there was an early payoff penalty for the specific year that you signed.
This is what makes it tough. If you signed in one of the years where the early payoff penalty applied, there can be a couple thousand in extra charges (that financial assistance they helped with), but if it doesn't say anything about it, it should refinance just like any other loan!
Hey Aaron, thank you for the information, it sounds like I've got some research to do.
Hi Elijah,
I am not an expert, and I am a new member, only because I randomly found this conversation in a search.
I bought a middle TN home in 2017 through the THDA as well and am also looking to refinance conventional.
I had a conversation with my mortgage broker about this very subject and thought I could shed some light and ask a related question.
With THDA, the rule is they take a 2nd mortgage (lien) on the property for the amount of assistance they gave at closing. There was no penalty for early payoff that year, but that doesn't affect the assistance repayment. If you sell, move out or refinance, you will owe that assistance when you close or when they find out you moved out. They always find out, so its best not to test them.
Currently, housing rates are such that you can refinance for free and equity will cover that expense, but you will have less to walk away with if you do a cash out loan. I personally would advise against cash out though. I would put it back into the mortgage to reduce the principal as much as is possible. Of course, this is only a viable option if you have enough equity to cover those costs and your credit is good enough to refinance.
I had a rough couple years and just did a loan modification with a plan to go conventional in a few months. I just hope I can beat the fed before they raise the rates. That is where my question lies:
Is there a refinance rule that would prevent me from refinancing just 2 months after a loan modification?
Oops, somehow it tried to double post. Please delete this post.