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Refinance from FHA 203(k) to conventional mortgage

Hello, We recently purchased a fixer-upper house in DC and are renovating it using a FHA 203(k) loan.  Based on market trends and recent sales of houses that will be very comparable to what our house will be like when the renovations are complete, I'm wondering if I can refinance out of the FHA program.

I am very seriously thinking there is a good chance in a few months our house will be reappraised at a high enough amount that our LTV would qualify us for a conventional mortgage.  

Are there rules against moving out of the FHA or 203(k) program so quickly? 

Thanks!
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May 28 2010 - Washington
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Answers (10)

We can help refinance out of the 203K Loan

Contact Rob Ross at 703-568-3749

Best in the DC area!

http://www.ifha203k.com/
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December 10 2013
@Andrew has the exact and correct answer.  I find a great number of people refinance out of the 203k after the project
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July 17 2012
After 6 months you can.
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July 15 2012
Profile picture for AnitaMacoubrie Hultin
Is it expensive to get a FHA 203k? How much is it for the mortgage insurance? Do u pay it each month? Is the financing as low as a conventional loan right now? Are closing costs about the same as a conventional loan? Thanks for any info...this is all news to me!
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July 15 2012
Profile picture for AnitaMacoubrie Hultin
Can I use the 203 plan if my home is zoned M1? I currently have private financing, have never been late and have owned the home for 10 years...the problem is that I have a balloon payment and the loan ends then...in Jan 2013...thats scary. I have not been able to get a loan because of the zoning. I just heard about this 203k program yesterday. The other problem is that my co-borrower has a short sale 2 years and 2 months ago...some lenders want 3 years, but most are ok with it so far...the zoning is the problem. The house is worth about $330k and i owe about $188k. We have enough income and very good credit. HELP!!  
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July 15 2012
No rules against refinancing out of the 203k to conventional.

Good luck.  There are such great properties in DC.
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June 03 2010
Adam,

I do it all the time.  I have a client that purchased a 203K with 3.5% down in November.  The property just appraised high enough that we are refinancing to conventional and avoiding MI.  Not real hard to document the improvements to the property when refinancing from a k loan so using the appraised value should be a non issue. 
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June 01 2010
You may want to consider how long you will be in the house.  While you will most likely get a better rate if you get out from the renovation loan, it may not be worth the additional costs if you only plan on staying in the house 3 to 5 years.

Also, FHA loans are fully assumable.  Assuming a loan is not all that common right now, but if interest rates go up 1 to 2%, having an assumable FHA loan may be an big plus when you go to sell the house.
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June 01 2010
There are no rules against refinancing out of the FHA 203K loan into a conventional mortgage. The only thing you will experinece is forfeiting the upfront mortgage insurance premium you paid when you first took the FHA 203K loan out. The premium is usually given back to you if you refinance to another FHA loan from the existing FHA loan. This is better known as a Streamline refinance.

If you need additional assitance please feel free to contact me at 312-719-3328 or jrobertson@getevolved.com . I am licensed to write mortgage loans in all states. Please feel free to call me if you need assistance or have other questions.

Best Wishes

Jevon
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May 28 2010
I don't believe there is any recapture fee on 203k, or any other penalty to get out of them - but not positive.  I assume you are refinancing to access some of your new equity or to remove the Mortgage Insurance.  You have a couple of other problems with refinancing.  Usually to use the appraised value, instead of the aquisition cost, you need to wait one year from the date of purchase.

Additionally, on FHA loans it is better to close your new loan at the end of the month.  I believe you get to pay the interest for the entire month regardless of when you close your new loan.  Just time it to the 25th of the month or so so you give yourself some leeway.

As far as I know, there are no rules against quiting the 203k loan.

See interest rate and loan programs at Redwood Financial Services
Good luck
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May 28 2010
 
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