Refinance questions and would appreciate your opinion???

Question

I have a duplex that's free and clear. 1 unit is currently vacant right now. Personally, I'm renting. I was wondering if I move into the vacate unit am I able to do a Cash out refinance with a FHA Loan ? Making the property my primary residence am I able to get the lower interest rate the FHA loan provide ? And also since the minimum down payment for FHA is 3.5% initially am I able to cash out refi at 96.5 with a duplex considering it will be my primary?

Stephanie P. · Answer

@Isiah Ferguson

No, PMI doesn't come with a HELOC, because generally, the ltv is going to be less than 80% on a HELOC.

I like that idea better because of the flexibility of line of credit, the closing costs are generally less and the fact that you only pay interest on the money you borrow.

Stephanie P. · Answer

@Isiah Ferguson

We don't do FHA at US Commercial so moderator, this is not a solicitation, but Isiah, I think I can answer some questions for you.

Cash out max on an FHA is 85% loan to value and you are correct, you would have to live there.  My understanding is you could take out an FHA loan against a free and clear property, but it becomes a math problem at that point considering the cost of upfront MI as well as monthly MI versus going with a conventional loan at 80% cash out with no MI.

Considering MI on an FHA loan is for the life of the loan, I think conventional 80% wins.

Hope that helps,

Stephanie