Refinancing From an FHA to Conventional

[Mark Feaver]

Searching for a creative lender or guidance.  I will do my best to keep this straight to the point and concise.

1. One year ago purchased a triplex with FHA
2. Planned to move in and delivered 60 days notice to tenant
3. Tenant was unable to move and others were on a year lease
4. Just finished one year with the property and want to refinance to a non-owner occupied conventional loan to utilize the FHA loan again to buy a duplex. one that I CAN MOVE INTO.

My current lender told me because I had not actually lived in the property this throws a wrench in these plans. Again, we had every intent of moving in, but due to circumstances regarding tenant, their job and COVID it could not happen.
Can anybody point me in the right direction here?  (BELOW IS THE EXACT EMAIL I WAS SENT FOR REFERENCE)

Thanks!

EMAIL:

Ok Mark I have been racking my brain here on how we can get this done. I am so sorry that you were never able to move in. As you recall, we structured your purchase as an Owner Occupied purchase meaning that you were going to live in one of the units. I realize that what has transpired has been beyond your control but we are also in a rising interest rate environment too.

If we attempt to refinance this as an owner occupied property, it will be discovered that you truly don’t live there when the appraisal is conducted. In addition, all of your paperwork doesn’t reflect the property address so there is no way around it. Therefore, in order to proceed we would have to refinance this loan as an Investment Property. But in order to refinance it as an Investment, you have to have a minimum of 25% Equity in your home as the most you can borrow is 75% of the Current Value on 3 Units. (HOME IS WORTH APROX $330,000)

You currently owe $250,000 on your tri-plex and current rates on a tri-plex Conventional is 4.375%. Your new payment would be $1675.73 which wouldn’t make any sense to do as your current payment is less than this. I believe the best option is (when you can) get the tenant out of your home and move in. Once you move in we could refinance Owner Occupied at 3.75% but even then the payment would be $1,583.45

I wish I had better news for you but the fact that you are not living there really has thrown a wrench in this coupled with a rising interest rate environment that we are in. Please let me know your thoughts as the rising rates has take all of the net tangible benefit away from us.