Author Topic: Refinancing my Duplex--should I do it, and thoughts on which bank to use?  (Read 1707 times)

rothwem

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I bought a duplex back in the summer of 2014.  I didn't have a whole ton of cash available, (not really mustachian yet and I really wanted a house) so I got an FHA loan with PMI for the life of the loan.  Not quite a year later, the FHA PMI rules changed, so I did an FHA streamline refi to cut my PMI by $100/month.  That cost $3800 for the closing costs, which was a ~38 month ROI.  Fast forward to now (just over a year), and my home value has shot up.  I bought at $254,000 and now my Zillow estimate is $334,000.  With a balance of just under $245,000, my LTV is 73%.  Im not sure what an actual appraisal is going to show since theres not too many Duplex comps, but if its <75%, I can refi out of PMI altogether for a savings of another $80/month.

My second reason for wanting to refi, besides the potential savings is that Id like to move out of the duplex and rent both sides sometime in the next year or two, and the FHA loan is an owner occupied loan.  It might be hard to get a second mortgage if Ive got an open owner-occupied loan on my report.  Lastly, the interest rates are pretty damn low right now, and I doubt theyll go much lower.  So I guess, Id ask, would you Mustachians refi if you were in my position?  Would you wait until I actually move? If you were going to refi, who would you go with to get an investment property loan?

J Boogie

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My second reason for wanting to refi, besides the potential savings is that Id like to move out of the duplex and rent both sides sometime in the next year or two, and the FHA loan is an owner occupied loan.  It might be hard to get a second mortgage if Ive got an open owner-occupied loan on my report.

I might be mistaken, but I think it's just a 1 year long requirement.  Double check maybe, that seems like an overly burdenous restriction if you can't EVER rent the place out.



rothwem

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My second reason for wanting to refi, besides the potential savings is that Id like to move out of the duplex and rent both sides sometime in the next year or two, and the FHA loan is an owner occupied loan.  It might be hard to get a second mortgage if Ive got an open owner-occupied loan on my report.

I might be mistaken, but I think it's just a 1 year long requirement.  Double check maybe, that seems like an overly burdenous restriction if you can't EVER rent the place out.

It is, but I think it might raise eyebrows when getting the second loan to have the FHA open. Or is that not really a concern?

fishnfool

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Aimloan has a good interest rate for investor loans. I'm hearing that many of the banks are bogged down with people refinancing and doing 60 to 90 day locks on rates.

rothwem

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Hey wow, those aimloan rates are really freaking good.  Thanks for the suggestion.

Ensign1999

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If you are thinking about refinancing a property that you might eventually turn into a rental, then you might want to consider doing it while you are living there as your primary residence.  Rates for a primary residence tend to be much better than investment loans for rental properties.

Without knowing all your numbers (loan amount, P&I, T&I, rent from the other side, potential rent) folks will have a tough time giving you a good answer.

rothwem

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If you are thinking about refinancing a property that you might eventually turn into a rental, then you might want to consider doing it while you are living there as your primary residence.  Rates for a primary residence tend to be much better than investment loans for rental properties.

True, though I've been finding that many non FHA loans for owner occupants require occupancy for a significant length of time, if not for the life of the loan. I'd hate to have it called due on me if they found out I wasn't living there.

Without knowing all your numbers (loan amount, P&I, T&I, rent from the other side, potential rent) folks will have a tough time giving you a good answer.

Basic numbers:

$244xxx loan balance , 3.5% interest, 30 year fixed FHA loan. PMI is around $160/month, taxes are 2770 per year, insurance is $66/month. Total payment is $1660 because I'm paying an $838 adjustment to account for under funding my escrow when the loan was originated.
« Last Edit: July 27, 2016, 12:49:34 PM by rothwem »

adamcollin

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If I were in your place, I would refinance my property.