Help with Refinance

[Matthew Hille]

I need help. I just got relocated from MN to CA and have a duplex back in MN that is rented with a FHA loan. I met the occupancy requirement and rented both sides out. I'd like to refinance to a conventional and drop the mortgage insurance. I owe about $158000 and got the appraisal at $223000 the property was purchased June of 2015 with a 3.75 rate and mortgage insurance is $109 a month. Is it possible to refinance to a conventional and cash out? I'd like to work toward setting myself up to purchase another property next summer. Any advise is greatly appreciated.

[Corey Blane]

Hi Matthew,

If the home appraises for $223,000 and you owe $158,000 (70.58% loan to value ratio) you can certainly refinance into a conventional and remove PMI.

However, since both units are rented this would be classified as an investment property in which case your rate will probably be 4.00% to 4.250% on a 30yr fixed depending on FICO credit score.

The maximum loan to value for a cash-out transaction (investment property, duplex) is 70%.

Based on the information you've provided it doesn't appear the value is high enough for the property to be eligible for a cash-out transaction but you can still remove PMI.

If you want to send me a PM I can run a complete analysis to see if removing the PMI will offset the slightly higher interest rate.

I'm also licensed in CA so if you're looking to purchase a property I can help with that transaction as well.