Next week should be a big week for the duplex in NH. On July 1 we started a “streamline” FHA refi where we use the same provider and they pay closing costs to refi down from 5.5% to 3.5%. The whole thing was supposed to be a 45 day process and no money out of pocket. Today is day 104
and we just got hit for a $600 appraisal fee so maybe not exactly to plan but looks like there is light at the end of the tunnel. We have an actual notary showing up next week to sign the docs so assuming this goes through we will end up saving over $550/mo on the mortgage. I realize this resets the interest clock a bit but right now we are looking to minimize expenses and maximize cash flow on the properties so it makes sense for us. We have had this house since 2003 and it basically has never made money. Being our first purchase we made some mistakes and basically only held on to it since the market tanked as we moved to CA and would have taken a beating selling it. The refi will turn it cash flow positive about $150/mo/door after expenses so that becomes one less thing I need to stay W-2 for.
Here is a link to the FHA streamline finance guidelines. The downside for us is that we had gotten rid of PMI by hitting 70% LTV on the house but will be paying it again on this loan. Weighing everything out, and based on the much lower principal vs. when we first got into the house (using only 3% down), the numbers still made sense so we are going to do it.
We were scheduled to have the closing Monday night (10/17) but the notary did not show up. Turns out the mort co had cancelled it due to something coming up in final QA. Apparently there is an FHA rule that the term of the loan can’t be extended more than 12 years past the original end date. We were beyond that and are now looking at the same rate but a 25 year term. This part isn’t really horrible but the company did (and continues to do) such a poor job communicating status and updates to us that it has become a real headache. They have promised to close next week with the new term but if that happens we are going to withdraw the request and go somewhere else. I heard from many people on the BiggerPockets forum that this should only take 30 days plus the rate is 0.25% better now than when we originally started so maybe it would be worth it. I just don’t want to go through this entire ordeal again with a new company. For now we are going to give the existing co one week to finish the deal and see what happens.
Also a quick mea culpa on the appraisal fee I mentioned in the original post. Turns out it is for another property we are closing on in Nov. I was just so fired up and the timing seemed right that I thought it was for this refi. We are not going to have any out of pocket costs and there is no appraisal for an FHA Streamline Refi.
Took a while for them to get everything sorted out and we didn’t closed until November. Fortunately we were not moving in or out of a house of this would have been even more frustrating than it was.