I'm looking for a conventional mortgage 5/1 or 7/1 ARM to refi-cash out my primary residence that I have an FHA mortgage on five years after foreclosure. The FHA mortgage is a 7/1 ARM at 3.5%. The problem with the FHA is the $200 mortgage insurance which makes the effective rate 4.5% I have adequate income and assets. I am aware that banks require proof of an extenuating circumstance if the foreclosure was within 7 years. Mine was loss of income and cash flow due to a tenant three months late on rent and a local unemployment rate of 15%. Next month will mark 5 years after the foreclosure so perhaps that will open up opportunities especially with credit unions that all have their own standard. Any suggestions would be appreciated!
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posted: Nov. 23, 2016 @ 3:19a
Pay down your mortgage with additional principle until you have 20% equity.
Or sell your property.
Or refi with additional down payment to bring the LTV down to 80%.
But going by what you've said in your post, you like to take risks so I'd suggest selling your property, renting for a few years, then pray that Trump changes policies that will crash housing market then gobble up all the properties with the cash you've been saving at the bank.
posted: Nov. 23, 2016 @ 6:14p
Does not hurt to ASK at CU of long-time membership, as long as not done as hard pull.
Senior Member - 10K
posted: Nov. 23, 2016 @ 6:18p
If that foreclosure still shows up on your credit, I'm surprised you still have any score left to even think of getting a refi (other than a HARP)
posted: Nov. 24, 2016 @ 8:32a
forbin4040 said: If that foreclosure still shows up on your credit, I'm surprised you still have any score left to even think of getting a refi (other than a HARP) I would think five years after foreclosure PLUS good payments since then would help.
OP isn't eligible for a HARP as that only applies to loans by Freddie Mac and Fannie Mae (not FHA).
That said, OP, while the foreclosure is a big hit on the score, I'm guessing the FHA mortgage is current with no lates over the five years. I'd say go for it. Check your score.
I got extremely lucky in the stock market since the foreclosure and now own a few properties free and clear. Yes, it took some extreme risks. That's why I sold all my stocks and went into real estate. What a lot of people don't realize is that a 3% 7/1 ARM is a below-market rate subsidized by fannie and freddy. Anything below 5% makes it easy to generate a large return from rentals without need for appreciation. Saving money alone does not guarantee living in comfort down the road. Inflation can always rear it's ugly head and real estate is a natural hedge although stocks are the ultimate in an inflationary environment.
Well, back to the point. Maybe I didn't make is clear but I already have an FHA on my primary but I wanted to get a conventional to lower the rate. Unfortunately I've found out this is impossible. Credit unions and banks that offer "portfolio lending" charge rates of around 7%. My best bet is either FHA or a HELOC like the one at dcu for 3.25% which I just applied for.
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