All Forum Posts by: Alex Pepe

@Alex Pepe, typically you can't buy a fixer upper with an FHA loan because they require the property to be in good functional safe condition for someone to live in.

You paid 1.75% for the PMI on FHA and likely 3.5 down. There is probably not enough equity to refinance conventional OR get a HELOC. To refinance conventional and get rid of mortgage insurance you need 80% loan to value. You can refinance to conventional at 90 but the mortgage insurance is often higher. You will need to go down in rate for it to be sensible to an Underwriter. Also the costs of two loans at $3000 or more each is added to balance.

Say you buy a $600000 house and you owe $585000 in a year you owe $584996. You will need the value to be something like $740000 to refinance and do another low down payment government/conventional loan. Markets are not increasing like that so you will need to add square footage to make the appraisal higher.   $585000+ 6000 costs 

Your departing property is appraised when you buy another low down payment property. The departing property also needs market rents to cover the PITI plus any HOA for you to qualify. Also you will need to write a letter of explanation such as job transfer or growing family size for it to make sense. If market rents don't cover the PITI (which is typical) that loss hits your debt to income ratio. In a year you need higher income or less debt if your ratios were tight. Not impossible but unlikely plan considering values are not increasing.

HELOC you need 721 score and goes to 90% which will be hard to hit in 2023 as you owe 98% from the start.

@Alex Pepe, I don't believe there are any prepayment penalties on FHA loans. So, yes in theory you could refinance after a year.

The question is, is it likely to make sense? Typically people use an FHA loan for the low down payment. In order to refinance into a conventional loan the house would have to go up in value by almost 20%. Very unlikely to happen in 1 year.

Also, with an FHA loan these days, I believe you pay a chunk of PMI at closing and then a monthly PMI as well. By taking out a second FHA loan you would be paying that chunk of PMI at closing twice.

You are likely better off using a conventional loan for the 2nd purchase. If its for a primary residence, you can probably find a loan with a 5% down payment albeit with a limitation of 3% seller assist.

You mention a HELOC. What equity would you use for a HELOC? With an FHA loan you likely put little down, paid very little off within 1 year. You likely have no equity you can tap with a HELOC at that point.

ATX is overpriced, but deals that i never thought possible are starting to appear. Flips in the 78745 ares for 250k, flips in round rock for 230k. Don't rule Austin out yet 

We have one this Thursday. If you look at our team page you can see it on there. @Devin Dang is hosting

I am open to meeting and am in Austin. Is there one this month?