I have bought a duplex in 2006 for $162k. I live in one side. I purchased this duplex with an 80/20

Asked by Justin, Michigan Thu Dec 18, 2008

interest only loan. The 20% loan has a fixed 5-year arm, while the 80% has a fixed 10-year arm. The 80% loan is at 6.5% reate while the 20% has 8% rate. I have been $10k down on the 20% loan. Finally, my 2 questions. #1 Do I have any options to refi? #2 I am thinking about moving out an renting both sides, how does this effect my interest mortage contract or interest rate?

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Keith Sorem, Agent, Glendale, CA
Thu Dec 18, 2008
There are many options for re-fi's with the new low rates. However, you will need to qualify with verifiable income, good credit score, etc.

FHA financing is available for non-owner occupied property, so if you are in the fact-finding mode, I would get rates on BOTH scenarios BEFORE you actually make a move (pun intended).

I recommend talking with a competent lender licensed to do business in your state.
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Luke Allison, , Asheville, NC
Thu Dec 18, 2008
Yes, you do have options to refinance as owner-occupied but not as investment. The reason for this is that currently there are no investment loans for anything greater than 80% Loan-to-Value. However, on owner occupied, you can finance up to 97% - an FHA loan would probably be best for you.

However, if you are thinking of refinancing as owner occupied now and then moving out, please keep in mind that you will need 30% equity in the property if you intend to use the rental income to qualify for your next mortgage. If you can afford both mortgages without considering the rental income you will be fine.

Aren't these new lending rules great?

Call me if you have any questions.
Luke Allison
Flagstar Bank
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