Financing in 23227>Question Details

crenshawcondo, Home Owner in 23227

How do I refi an owner financed condo to conventional mortgage so I can rent out property with less than 30% equity?

Asked by crenshawcondo, 23227 Wed Sep 26, 2012

I have a owner financed 20 year mortgage on a condo in the Ashley Terrace Subdivision. My agreement prevents me from renting the unit and the market for selling a condo in this area is not good. I am almost 3 years in, have a good credit score and want to refi to a more convential mortgage where I can rent the unit out and move into a regular house. Or even do a rent to own arrangement, I've done the math and it would be cash-flow positive at lower than market rental rate but talking with a couple of mortgage folks, they indicate that the normal equity required to do this is 30 %. Any thoughts on how to finance this?

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Bruce Qualters’ answer
1. Would most likely need to document your mortgage history with cancelled checks.
2. As an investment property you would most likely need 20% equity to accomplish the refinance. Though you would not need this much as a primary residence.
3. I can not currently check the Approval status of the project, though it will most likely need to already be approved, though some lenders may be able to offer a spot approval.
4. In regards to purchasing a new property, you most likely need to have 30% equity in your existing property unless you can qualify for the new payment on top of your existing payment. That is the equity is required if you need the rental income to make your debt ratios acceptable.

There may be some portfolio options depending on other factors which would not be subject to the same requirements that most lenders offer. Smaller banks can generally write loans that are outside of the box, though generally come at a higher cost.

Hope this Helps.

Bruce Qualters
Sentrix Financial Services

0 votes Thank Flag Link Wed Sep 26, 2012
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