When working with buyer's on foreclosed homes, I always want them to be aware of what I think is the #1 risk, that is utilizing of personal funds to get into this type of property. The bank may not be willing to pay for repairs, appraisal's and/or title insurance (this is big one). So, a buyer maybe required to pay for these items, if for some reason the buyer's lender does not close the buyer's loan. The buyer can be at risk of loosing some or all of the personal funds used.
There are several factors to consider when refinancing, I would speak with a local lender, maybe the person you used when you purchased, could help answer these questions.