Home Buying in Tulsa>Question Details

Kayskidz69, Home Buyer in Oklahoma

Refinancing, and renting (Fannie Mae)

Asked by Kayskidz69, Oklahoma Mon Feb 4, 2013

We have a current home that is a Fannie Mae. We just got preapproved to purchase a second home, without any rental income. However, we want to refi our current loan to reduce the payments to give us extra breathing room while paying two mortgages. We are considering renting the property. We have owned it for over 10 years, but we recently adopted 3 children and desperately need a bigger home. The market is slow in our area and could take a significant amount of time to sell, however it is a great rental market.

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I am not a lender but I would think if you did the refi before purchasing another property it could be done as your primary residence. Also if you decide to rent you might consider an LLC to help you avoid possible liability issues. If you need help finding your next home, I can help.
0 votes Thank Flag Link Tue Mar 19, 2013
Once it's made known to the loan officer that you will be buying another property while holding on to the current property, it has to be labeled as an investment home. It may not even be rented. Reason being is that you canot have two primary residences at the same time. Now you probably need to run some scenarios about the need to refinance and weather it's the right thing for you. The fact that you've had the property for 10 years, assuming the loan is the same length as well, you've paid most of the interest and are now paying more towards the principal. You need to know weather you should refinance into a 30 yr or 15 year loan or some other term. Investment loans with good credit and enough equity, are very similar in cost as a primary residence. Optimal scenarios are 75% LTV or better and a credit score of 740 or better. In those cases your rate on the investment property will be very close if not the same as your primary residence purchase.

Hope this helps.
0 votes Thank Flag Link Mon Feb 4, 2013
Would we be better off not refinancin and just hoping we can get a renter in ASAP even if it means taking a small monthly loss on the mortgage?
0 votes Thank Flag Link Mon Feb 4, 2013
If we don't rent it for at least one year after refi, can we refi with our current lender at lower rates? The whole point of refinancing is to lower our payment. If we refi as an investment loan, I doubt our payments will be reduced. The fact that we have occupied the home for over 10 years doesn't come into play in terms of the 1yr owner occupancy? That 'clock' resets with each refi?
0 votes Thank Flag Link Mon Feb 4, 2013
You can definitely refinance your current property, however since it will be a rental it will have to be done as an investment loan. Please call me for more details.
0 votes Thank Flag Link Mon Feb 4, 2013
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