Can you refinance your MSHDA loan?

We work with a lot of home buyers.  As time goes on things change in there lives and they often call in looking to refinance the original mortgage we did.  The question often comes up, can they refinance the MSHDA loan?  The simple answer is yes.  But lets take a deeper dive into MSHDA financing and the refinancing of a MSHDA loan.  I recently did an interview with Realtor Alex Craig at Dolinski Group.  Below you will find the video of that call and answers to your questions.

What is a MSHDA loan?

MSHDA stands for the Michigan State Housing Development Authority.  There are a couple different types of MSHDA loans available but essentially it is a down payment assistance program thru the State of Michigan.  MSHDA loans work in conjunction with FHA, Conventional, VA, or Rural Development loan programs.  The easiest way to explain it, is that its like an add-on option to one of those programs.

IS MSHDA money FREE money?

NO!  This is a big misconception in the market place.  MSHDA down payment assistance is not free money.  It is an interest free loan.   When home buyers use MSHDA funds to assist with the purchase of a home, MSHDA puts a lien on the property.  When the house is sold or refinanced down the road, that 2nd lien gets paid back interest free.

How do you refinancing when there is a MSHDA lien in place?

So, you used the MSHDA down payment assistance when you bought your house and are now thinking of refinancing, we can help!  So yes, it is possible to still refinance.  This scenario really isn’t much different than other refinance scenarios.    It’s very similar to someone that bought a home with a normal mortgage and then later on took out a home equity line of credit.  They are similar in that there are 2 loans we need to payoff, the main mortgage and the MSHDA mortgage.  The actual refinance process is the same; Go thru a mortgage application, discuss refinancing options, processing and underwriting happen, then you close.  Its a simple as that.

Does it make sense to refinance a MSHDA loan?

This is really the key question, but its the same question anyone refinancing faces.  The fact that there is some money owed to MSHDA does add an extra layer to the analysis, but it all comes down to the individual circumstances.   When we look at refinancing any loan, MSHDA included its all about the borrowers situation and goals.  Here are just some questions that can come up:

• Are you looking to improve money cash flow?
• What are current rates?
• Do you need cash out for things like home improvements?
• What is the homes current value?
• Is there a divorce situation?
•  Are you looking to make another large purchase?
• How long are you planning on living in the house?
• Do you need to consolidate debt?
• What’s your current credit score?

The list goes on and on.  What’s important to one person may not be important to another.  In any refinance scenario its important to look at the entire picture.  There is no cut and dry answer to this question.  If you want to figure things out the best place to start is by filling out an online application.  Once it is received, we will give you a call to discuss options.  Of course if you have any questions don’t hesitate to reach out!

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