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How soon can I get out of an FHA loan?

I had a short sale about 3 years and 4 months ago.I will be closing a 5yr fixed FHA loan in August on a new Townhouse. I'm putting down 30%. How soon can I refinance to get out of paying FHA monthly insurance?
  • July 09 2013 - North San Jose
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Answers (9)

I would question why you are using FHA to purchase in the first place? With 30% down payment, conventional financing through Fannie Mae is available with only two years elapsed from short sale, Assuming you did not have other derogatory events that would preclude you from Fannie Mae financing (such as bankruptcy), there is no reason to use FHA with such a large down payment.
  • July 10 2013
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I'm not sure that's correct, Justin.  My guidelines show that the waiting period is four years after short sale. 
  • July 10 2013
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Ray Fannie Mae policy is 2 years with 20% down, 4 years with 10% down and 7 years with less than 10% down.   

This was announced April 2010 in SEL 2010-05.
  • July 10 2013
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closing a 5yr fixed FHA loan
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FHA doesn't have a 5 year fixed rate mortgage. 

FHA does have a 5 year Adjustable Rate Mortgage.  

Did the same yoho taking you FHA with 30% down tell you it was fixed?.
  • July 10 2013
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We now have a Conventional Program that is 2 years after a short sale with as low as 5-10% down. MI rates are much lower than FHA. Contact me through my profile if I can help.
  • July 10 2013
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The loan is being done through WellsFargo who is the in house lender thats giving $8k credit for using them. The second loan on my short sale was through WellsFargo. and due to this the underwriters at WF might have a problem in approving my conventional loan and thats why we were trying to get a FHA loan. Theres another problem with a lot of lenders issuing loans  on a new condominium project. They require that the developer have 70% sold or have contracts on them before they can give you a loan. Thats why I had to choose the in house lender. And I was told that the new FHA policy is that the insurance through FHA will be for the life of the loan and I cannot re-finance the loan for another 4 yrs which makes it a total of 7 yrs since the short sale. And the WF agent said that I could get a 5yr fixed rate.
  • July 14 2013
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what I see is a huge conflict of interest. WF is steering you towards a more expensive loan program than others you would qualify for.

again, FHA does not have a 5 year fixed rate mortgage, only a 5 year adjustable  rate mortgage.

You can refinance out of an fha loan right away, there's no 4 year waiting periods.

I'd sit it out until they can get 70% of the units in your phase under contract.

  • July 14 2013
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its a 5yr ARM. The rate and payment is fixed for 5 years. I was told today that I can refinance after about 1 year or sooner as I would need an appraisal again and they(WF) was going off of the Sale price offered to me.
  • July 15 2013
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You should be able to get out of the FHA right away if you have the equity, and meet the guidelines for the conventional.  There are a few factors/details of your SS that may allow for the refinance sooner than later.  I am lender in the Bay area, get in touch, and we can discuss the options.  good luck.
  • July 15 2013
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