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Refinancing an FHA 203K to a Conventional 30 Year... How Long

We are currently making an offer on a short sale.  The house will need some repairs and as a result we are going to obtain a FHA 203K loan.  The house currently appraises higher than our FHA 203K loan value and therefore, has immediate equity.  We do not want to pay MIP any longer then we have to.  How long do we have to wait post repairs using the FHA 203K loan to refinance to a 30 year conventional loan?

Thanks a bunch!
  • May 14 2012 - US
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Answers (4)

Best Answer

Yes, one year "seasoning" is required across the board unless you're refinancing with a local bank who isn't selling your loan to Fannie Mae/Freddie Mac but they may have other overlays so be careful and make the appropriate inquiries.

@To the previous anonymous reply:  Not everyone has the cash to qualify on paper (or in reality) for a fifteen year mortgage.  While it at times is a good idea to consider the fifteen year over the 30 year, this poster is looking to purchase and refi when their property is seasoned.  It makes tons of sense to do it if values and rates cooperate in one year, this is of course a gamble like anything else involving future rates/values.
  • June 05 2012
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FHA forward mortgages with amortization terms of 15 years or less, and a loan-to-value (LTV) ratio of 78 percent or less, remain exempt from the Annual MIP (Mortgagee Letter 2011-35). Otherwise consider 10% DP:
With 10% down and less than a $625,500 loan MI will cost .35% per year - from there it goes up to .85% with 10% down and over a $625,000 loan. General refi rule of thumb is if your interest rate plus the MI is not 1%+ higher than the current 'offered' rate without MI - don't consider the refi.
Curious - what rate is the lender charging on the 203K?
  • May 14 2012
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Wish it was a shorter time frame but 1 year it is!  Thanks for your help and quick response :)
  • May 14 2012
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Hello, The timeframe is going to be one year from purchase. This is an accross the board lending restriction right now, in order to use market vale for your loan you must wait one year from purchase. Any refinance done before that time will use purchase price plus improvement cost to calulate value, and then you apply your LTV (loan to value ratio, i.e. for FHA 96.5% or conventional 80%at to avoid MI.) So one year after putchase 80% of market value must be greater than total loan balance. Good luck!
  • May 14 2012
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