203K Loan Refi/ HELOC

4 Replies

Wrapping up my 203k loan renovation and have a couple of questions regarding the refinance process and/or any advice! 

In month 7 of my 203k loan reno on a duplex. Hoping to refinance out of the FHA loan and tap into the equity to acquire another project. Wanted to get some advice on which kind of loan to refi into (I.e. conventional, FHA streamline, etc) to get rid of the PMI if possible. Also what is the process like to tap into that equity? I've read that you can't do a cash out refi with FHA 203k but you can do a HELOC.

What did others do when the renovations were completed? 

Thanks so much in advance!  

@Simone Douglas Ok, so I know you were hoping to get your questions answered, but I have to say I have been trying to do an fha 203k loan but my lender refuses to do one. I've have such trouble finding a lender and an agent who are familiar with the process and information is pretty scarce online. Could I message you on the subject?

@Simone Douglas refi to Conventional, no brainer. If you are planning on using FHA again for another property, then you need to refi out of FHA, because you can only have 1 FHA loan at a time (unless you relocate 100 miles away). So you would need to free up your FHA eligibility. And don't do a heloc first, or you will ruin any chance of refinancing. Only do a heloc AFTER you refi to Conventional first, if you can find anyone to go over 80% LTV on a 2-unit.

Best of luck!

Hi @Zack Karp

Thank you so much for the insights! So timeline wise, that would mean if I were to refi out of fha to conventional let’s say today, I would have to wait another 6 months with the conventional loan to pull the equity out? 

@Simone Douglas no you would just do a cash out refi Conventional loan once you're done with the rehab.  Assuming there's equity now for you to pull out.  Since this is a 2-unit property, if it's still your primary residence, your max loan amount for a cash out refi is 75% of the new value.  If you aren't going to be living there, and moving on to the next house hack, then if you refi as an investment property the max loan amount is 70% of the value.

Hopefully you ran your numbers with this exit strategy in mind.  If you didn't, you're working with the wrong LO and realtor.  You should always have the exit lined up before you enter into a deal.

Best of luck!