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Refin an FHA loan (30 year 5/1ARM)

I have an FHA loan on a house in Salem, OR that is currently a rental property (I moved to another state). I am trying to refinance to a lower rate than my current 4.25% (a 5/1 ARM on a 30 yr loan).

Since I do not live in the property I am not being any options by my current lender (a big company) as they are expecting an LTV of 75%. In addition, at the end of my 5 years, the interest rate may go up by up to 1%!

I am trying to understand straight forward how I can refinance this loan to get a lower rate. There has got to be a way to do this (like maybe switching to a conventional loan with some money down). I now understand how people are continuing into foreclosure or do a short sale, as they are not being allowed to take advantage of the low rates available today.

I cannot move back to Oregon or into the property. Can someone suggest some ideas?

Loan: $219,000
zillow's estimate of value on 01/24/13: $ 201,225
5/1ARM interest rate changes take effect around October'13.
  • January 24 2013 - Salem
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Answers (6)

bummer
  • January 25 2013
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I did in Dec 2009.
  • January 25 2013
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Did you refinance since you bought the home? If not then you are looking at the wrong MI factor.
  • January 25 2013
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Thanks gentlemen.

Clay: Looks like the no appraisal FHA loan is actually increasing it by 50$ monthly because the Govt apparently raised the insurance premium rate. :(
  • January 25 2013
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I have not personally done a FHA streamline for a non owner occupied property.  However this would be the best way to accomplish your refinance,  to go to a conventional loan you would have to have at least 20% equity.

The FHA Streamline uses the original purchase price for your appraised value.  The basic concept behind the program is regardless of your current income, you are making payments on time.  Reducing the payment only increases the likelihood of you making payments.

For owner occupied properties, the borrower does not have to prove income, just have a source of income. This coupled with no appraisal make them one of the least complicated loans to do.

You will need a loan officer that is licensed in Oregon, you could try and work with the current servicer of your mortgage (the bank you write the check to) I don't recommend this however, I have seen people get better rates from brokers and a less stressful process.  YMMV however.

Good luck,
-Matt
  • January 24 2013
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If it starts adjusting in Oct 2013 then you can do a no appraisal FHA streamline.You will save aprx 180/mo.
  • January 24 2013
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