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Can I refinance my FHA loan into a conventional loan so I can rent out my house and buy a condo?
Written By: admin on November 12, 2009
One Comment
I bought my house in 2007 with an FHA loan. I believe the terms of the loan state that the house must be my primary residence for 5 years before selling it or refinancing.
I want to buy a condo and relocate to New York in the next 3 years. I’m saving money to do that and working on other aspects of plotting (job, etc). I want to rent out my house, but due to the stipulations of the FHA loan, I can’t just go renting it out all willy nilly without getting in distress (with the IRS or with the state that gave me the money).
Is it wise to refinance the loan from an FHA loan to a conventional loan and then rent it out?
I did some research on this, and it seems that my PMI should be paid in full within the 5 year period, but I may get charged for the refinancing, and possibly a penalty from FHA.
Or should I just sell the house, buy another one with a conventional loan and rent that one out instead? Either way, I’m considering having two properties, a primary residence in NYC and a rental property in my current state.
Thanks for the help!
Are the terms the same for a CDA loan?
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Tags:
3 years,
cda,
conventional loan,
current state,
fha loan,
irs,
job,
pmi,
Refinance to FHA,
rental property,
saving money,
stipulations
Tags: 3 years, cda, conventional loan, current state, fha loan, irs, job, pmi, rental property, saving money, stipulations
Unless you have an FHA loan insured by Bond money, you only have to live in it for one year before it can become investment property. Unless you place a lot of money down or are paying extra, the mortgage insurance will not be paid in full in 5 years with the FHA loan. Your LTV has to get down to 78% for it to drop off. Five years is the minimum amount of time you must keep MIP on an FHA loan. If you refi to a Conventional loan you must live in it for one year as your primary residence. It is much cheaper to refi as a primary residence than investment property.
There should be no penalty for refinancing from an FHA loan. Just plot the closing so the payoff is received by the 1st day of the month or you will have to pay a full month’s worth of interest.
There are lots of headaches with rental property, especially if you are out of town. I would sell & use the equity as a downpayment.