Yup, that sounds about right. Actually, I’m doing the reverse. I bought a cheap condo for cash, and now trying to do a cash out refi…
I’m hitting 3 issues
1. Cash out refi is limited to 70-75% (not really that big a deal)
2. Rate is about .75% higher, and I can’t find a decent no-cost option (even at absolute mortgage..My lender I did a refi with doesn’t finance investment properties.
3. Some places won’t make a loan less than $100k.
My broker friend recommended that the cheapest option for me would be to cash-out refi my primary… But I’m trying to avoid that because I want my primary to be free and clear sooner versus later…
I tapped my 401k with a loan @ 4% since I end up paying it back to myself, and since I wanted to reduce my 401k stock holdings at the time.
I have an untapped heloc @ 3% on my primary, that I can pull if I need to…Not sure if I want to go that route though. I mainly want to free up as much borrowed cash as possible for a hopefully pending purchase that will go through, as well as possibly more.
I wish the banks would relax the lending standards for rental props for people like me, but they’re still kinda strict about it.[/quote]
Thanks Flu.
I actually bought my primary residence last year and paid cash. Problem is I set it up under an LLC and it sounds like it’s complicated or at least I’d have to pull it out of the LLC to take equity from it (or at least that is what the broker mentioned) but honestly I have no experience with this at all.
If anyone has pulled out equity out of a house owned by an LLC I’d be interested in hearing about that.
Flu, yes the mortgage broker did say that 0.75% premium for condos goes away if you put down at least 25% vs. 20%. Of course you still have the premium for it being an investment property vs. a primary residence.
I also would prefer not to pull out equity out of my primary home which is free and clear. There is always a nice feeling about having your primary residence paid off.
Yes, it sounds ridiculous how strict the lenders are on these investment properties. The broker was joking that some deadbeat with a mediocre/decent FICO can get a VA or FHA loan and be fairly overleveraged.
He said one of his clients will have something like $40 left after his down payment and putting a very low downpayment yet those types can often get a mortgage easier than a solid buyer with a high FICO with great income buying investment properties.
[quote=spdrun]AFAIK, *current* rental income counts regardless of time as a landlord. Proposed rental income from the property you’re buying doesn’t count unless you’ve been a LL for several years.[/quote]
Hmm… I’m not sure about this as all my rental properties are foreign properties. I do have almost a decade track record renting out properties but not in San Diego.
Can you be an experienced landlord in any city as long as you have it well documented? Or does it have to be the same city from the proposed property you are buying?
