No. of Recommendations: 0
Cal,

I had an FHA loan 2 years ago at 8.5. At the time I hated the fact that I was paying above the going mortgage rate plus points, MPI and the monthly MPI.

The good news is that yesterday I closed on a refinance at 6.85 no points.

Like yourself, we didn't qualify two years ago for a conventional loan. Now that our house has increase in value and we have demonstrated that we could pay the mortgage, the bank we used was more than happy to do business with us.

As for refinancing a few months after getting a mortgage-- I called around right after we closed and was told I had to have a mortgage for a year before being considered for a refinance.

BTW if 5K is the cap on downpayment then going FHA might be your only option. Don't sweat it. The rate you were quoted sounds respectable and if you really love the house then go for it.
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