Refinance 4 Fam FHA to 3 Fam?
Hi, I am contemplating purchasing a 4 family brownstone with a FHA loan and using the savings on my downpayment to renovate the property into a 3 family. I am told that the only way to get out of MIP (PMI) is to refinance in 5 years. However, I understand the limit is lower for…
Hi,
I am contemplating purchasing a 4 family brownstone with a FHA loan and using the savings on my downpayment to renovate the property into a 3 family. I am told that the only way to get out of MIP (PMI) is to refinance in 5 years. However, I understand the limit is lower for 3 family properties and will be going down soon. My questions are this:
– Is there a way to get rid of the MIP without refinancing the property?
– Anyone know where the 3 family conforming rate is headed?
– If the purchase price is $1.1M and I put 3.5% down, where will the property need to appraise as a 3 family to get me the future conforming loan?
Thanks!
Hello,
An FHA loan has a requirment minimum of 5 years. But see my note below- it’s Hud’s rule on PMI. They actually calculate the 78% based on the purchase price.
There is no true way of knowing what will be done with loan limits in the future but the current Jumbo Loan Limit is 1,129,250.00.
FROM HUD:
If you paid an upfront mortgage insurance premium, you will also be charged a monthly mortgage insurance premium until the loan-to-value of your mortgage reaches 78 percent of the initial sales price or appraised value of your home, whichever was lower (provided that premiums are paid for at least five years). You will reach the 78 percent loan-to-value threshold in one of two ways: Through normal amortization as you make your monthly payments, or by paying additional principal on the mortgage. Your lender can advise you on when the mortgage will reach the 78 percent loan-to-value threshold. If you were not charged an upfront premium, you will pay the monthly premium for the life of the mortgage.
Vanessa Thatcher
Senior Loan Officer
ATLANTIC HOME CAPITAL
Tel: 631-687-3510 x106
EFax: 631-918-5222
Cell: 631-672-4113
I’m confused, If you have an FHA loan and refinance within 5 years of origination, will you still pay PMI after the refi if the LTV is over 78%?
Thank you for the information. A couple of follow up questions:
– You say MIP goes away if LTV is 78%. Can I get out of it by getting an appraisal, or will it require actual paydown of the initial loan to 78% of the original loan?
– Do you also know where the 3 family conforming limit will go to? – I understand it is now $1.128M, but want to anticipate where it may end up at the time of refinancing.
Hi Adam-
Actually if you go to http://www.PMI-US.com you can price the MI. You can get PMI on a 2-4 units <90 Ltv.
Have a great day!
Vanessa
Vanessa- You can’t get PMI on a 2-4 unit property. If you are buying a 2-4 unit house they only way to do it with less than 20% down is FHA.
Conforming loans can be done with pmi. Fha recently increased the premiums on FHA loans.
Conventional loans have pmi over 80% of the value. So on a 1.1 purchase you would need to mortgage 880k to avoid pmi completely.
FHA loans have pmi for a MINIMUM of 5 years or until the loan to value reaches 78%. If you can swing a 15 Year payment, you can take an FHA loan with a 15 year term and very little monthly PMI (you see the premium is lower on a 15 year term).
You can refinance an FHA loan at anytime. You dont have to wait 5 years.
3 family Conforminng rate today is: 4.75%
FHA is 4.375% on a 30 year fixed.
The 15 Year FHA today is at 4.0%
Rates are very very low right now.
Call me if you need me.
Vanessa Thatcher
ATLANTIC HOME CAPITAL
Tel: 631-687-3510 x106
EFax: 631-918-5222
Cell: 631-672-4113