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Main home refinance-update, not as easy as I hoped.

June 11th, 2014 at 05:45 am

Hi all,

As you recall I bought my house back from the bank for a deep discount but had to get a hard money loan. Loan is 12% interest for 1 year 10 months. I had a fail safe loan in a year at normal rates and was going to try something sooner..

Status.. my fail safe may not work as it mmay not be deemed an arms length transaction. I was able to get around this arms length issue w the current loan on the house (had same issue w lenders) and will need to figure a way to get around it w new loan.I am actively talking to FHA guys to see what can be done.

The other loans are likely to come in at 8-9% w terms of 2-5 years. but are likely to have VERY high points again.. I can not keep paying all these points but may have too. Need to weigh pros and cons.

I CAN for sure get a normal FHA loan in 3 years.. so 2018 but did not want to wait that long .. wanted to start paying off house and hard to do so with such high rates and who knows what rates will be like in 2018

I expect to hear on more loans by next week and will look at costs etc and also should have ideas on how to work around FHA or if I can

I can only apply for hte FHA 6/2015.. so if hte FHA looks likely ( it carries normal mortgage rates).. I will wait a year, apply and see if that loan comes through before seeking out a higher rate loan.

A 3rd option is to find a big lump sum of money to pay it off or pay off a big chunk of it

I have lost essentially almost $3000 monthly in income as of late.. HUGE LOSS...(loss of rental house, reducing not for profit) in the past 2 months am am still adjusting (that is why my finances have been struggling lately as I 'settle up' w folks and smooth out) but w this $3000 loss I realistically without getting more income (new job, side job) can not afford the taxes on this house unless every year I use my tax return (which I can do)

So there we have the update.. onward.

Obviously I can always sell the house if at some point it does not make sense. but not too that point yet. I have quite a bit of equity in the house (and just bought it 5 months ago).

I have done the impossible before.. just got to do it again. Smile

3 Responses to “Main home refinance-update, not as easy as I hoped.”

  1. Another Reader Says:

    Would it make any sense to pull one deed of the six properties in September and sell that house to pay down your house?

  2. Rachael777 Says:

    I had thought about that but if I sell a house I have that much less rent to pay the 6 homes loan. I decided which home I am pulling out already (for September).. each home though is worth an average of $700 NET rental inc9ome.. (after taxes, mgmt, repair escrow, vacancy escrow and insurance)..

    I did figure out today that if I make $65/hr vs $55 I will actually be ok if I take a 8-9% loan and can up my 401k contribution and in general have more breathing room even w the $3000 income loss I took over these past 3 months. Also re taxes are $900 a month not the $1000 I thought. Accountant and I are trying to figure out the arms length transaction issue now. will present ideas to FHA guy tomorrow. The specific loan is the FHA back to work and it is BRAND new so being manually underwritten .. it may be the case in a year they are more automated, and the guidelines are more well know.. (sortof how the loan mod program smoothed out) Anyway..if I can get an FHA loan in a year and get this job I am in very good shape. I hiave slashed my costs to the bone and still slashing (my food, and misc is not tracked well and am starting to undertake that). thanks for the input.

  3. Another Reader Says:

    BTW, there may be better options at the end of the three years, You may be eligible for conventional financing by then. Your credit score will improve as time passes. You have a substantial amount of equity, meaning your loan to value ratio may be less than 80 percent. You should avoid the fee heavy FHA option if at all possible.

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