A year ago I did an FHA 203 K loan for a client. The house needed a boatload of work in which much of the work would be done by the buyer and his family, one of which was the contractor.
The purchase price of the property was $112,000, plus $30,000 for renovations. This became a family event to get this property renovated. He brought me photos of the finished product, just amazing.
After a year of ownership, a mortgage can get done based on the new value of the property. A $150,000 conventional, 15 year mortgage was applied for. We had estimated that the value would come in over $200,000 it came in at $210,000.
The mortgage payment for the 15 year mortgage with no mortgage insurance was $39 more than the 30 FHA mortgage was. For this particular client a refinance after a year of ownership was the right strategy to eliminate mortgage insurance and shorten the term of the mortgage.
