FHA 203K Loan and refinancing - Zillow Mortgage Advice

Just entered into a contract for sale of home in Washington, DC. Row home with basement rental. Sale price was $755,000. Property requires complete reno so we must get a 203k or investor loan. Thinking of looking into a?FHA 5/1 Arm 203k Loan, with accompanying mortgage insurance.

We think we want to put 5% down. The hope is that we can refi out of this loan and into a conventional 30 year mortgage within the year to get rid of MI.

Surrounding homes are valued at between 850,000 to 1.1 million, so we are hoping that after reno we will appraise at a much higher value, making it easier to hit the 20% equity mark.

Any thoughts on this plan? Refi we are asusming will cost between $5000-7000.

Source: http://www.zillow.com/advice-thread/FHA-203K-Loan-and-refinancing/502309/

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