Posted on: 10th May, 2010 09:15 pm
i am doing a cash out refinance for home improvement projects. current interest rate is 5.85, home value is 190,000 and i currently owe 125,000. to complete all projects i will need aprox. 30,000. here's the question: i am told that i will have to go fha at 4.75 for 30,000. all fees including fha and escrow =10,000 + additioanl mi of $67, which seems like alot for an additioanl 10,000 out. with a conventional 30 year fixed at 5.25 - 5.5 and fees closer to 4000, i am told that i could only get around 20,000. as mcuh as i want to get a majority of the old house projects done, i also want to make the smartest loan decision. i am having trouble calculating the difference. can anyone explain to me how to figure this out?
thank you
thank you
Hi thalia,
One of our guest posters have replied to your query at:
http://www.mortgagefit.com/refinance/cashout-fha.html
Take a look at it. Hope it helps you.
Thanks
One of our guest posters have replied to your query at:
http://www.mortgagefit.com/refinance/cashout-fha.html
Take a look at it. Hope it helps you.
Thanks
You either need the $10,000 extra for home improvements or you do not.
With conventional loans, the maximum cash out is to 80% of the value and that leaves you with $20,000 for improvements. (IT may be possible to do 85% of value if your credit score is over 740 and debt ratio would be 41% or less. You would have a PMI payment for at least two years)
The decision is simple. Do the conventional loan if you can get by without the extra $10,000 you want.
If you must have the total $30,000, do the FHA mortgage.
Neither choice is overly earth shatteringly different in the long run as far as what you pay and what you owe over the years. Over 30 years the FHA will hjave cost about $9,000 more. You will never know the difference.
With conventional loans, the maximum cash out is to 80% of the value and that leaves you with $20,000 for improvements. (IT may be possible to do 85% of value if your credit score is over 740 and debt ratio would be 41% or less. You would have a PMI payment for at least two years)
The decision is simple. Do the conventional loan if you can get by without the extra $10,000 you want.
If you must have the total $30,000, do the FHA mortgage.
Neither choice is overly earth shatteringly different in the long run as far as what you pay and what you owe over the years. Over 30 years the FHA will hjave cost about $9,000 more. You will never know the difference.
