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Can I refinance my 1st mortgage on my condo while it's being rented out?

Hello,
I had to move out-of-state for my job couple of years ago and am currently renting out my condo. I am actually renting a place now so I don't have another mortgage.  I have two questions: 1) Am I supposed to tell my mortgage lender that I am currently renting out my place? 2) Am I allowed to refinance my mortgage when it's not owner occupied? I am planning to move back to my condo in a year, but need rental income to subsidize my mortgage in the meantime.  Any help is greatly appreciated.  Thanks.

  • February 26 2014 - Seattle
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Answers (10)

So here the deal. If you are renting the condo out and are seeking to refinance it, you can do the refinance as an investment property but you need to be aware of your condo HOA policy for percentage of units deemed as rental properties. There is usually a limit so that the entire project isn't all rental properties. Now if you are good to go and you can refinance as an investment property, you don't need to worry so much unless you are electing to purchase another property in your new state. If you are buying another property, then the rental income for the condo needs to be claimed for the last 2 years to be able to use it to off set the mortgage payment. If you recently rented it out and it is not on any tax returns yet, you can use the current lease agreement only if you can document 30% equity via appraisal or AVM compared to your mortgage statement principle balance owed. Some exceptions can be made for various programs/lenders.

Other option is to wait a year, collect your rental income and then provide evidence that you have moved back into the condo next yea (drivers license, address on tax returns, utility bill in your name) and refinance as an owner occupied property.

Let me know if you have further questions.

 
  • May 04 2014
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Profile picture for Rajmago
DISCLAIMER: I am not a real estate expert and am just sharing my personal experience.

I had a similar issue. Bought my condo in 2008 at 5.5%. Met my wife and moved in with her. I looked at refinancing while I was living with her and my condo was listed as a rental property. you'll be able to refi but you'll pay a higher rate because it's an investment property. The rate they offered me for it being a rental property (4.5%) just wasn't low enough to warrant a refi. We finally just moved in to my condo earlier this month so we can claim it as our primary residence. We haven't refi-ed yet but plan to in the next month or so. The rates I am seeing currently are around 3.25%, which is a whole percentage point lower. If you can move in to your condo and refi as a primary residence, that would probably the best scenario. If not, you're likely stuck paying the higher rate, as it is an investment property. 
  • May 03 2014
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Profile picture for daveskow
4/14/14

Hi there ...do you still assistance with the refinancing of the condo ?
  • April 14 2014
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You can refinance your mortgage on that property, but now it will be an investment property instead of a primary residence property. When you refinance, you will now have to use your current rental expense for your current home when it comes to your expenses. Also, has your rental income been recorded in your taxes? If so, then you can most likely use it. Either way, the best thing for you to do is to speak with a knowledgeable lender to see if you can get started on refinancing. If you need additional assistance, feel free to reach out. Good luck!
  • February 26 2014
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Yes and yes. You would need to refinance it as an investment property. Shoot me an email or give me a call and we can talk specifics. Doug
  • February 26 2014
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Yes you can, [content removed by Zillow moderator].
Regards
David
  • February 26 2014
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You would be able to refinance, it would simply have to be done as an investment property.
  • February 26 2014
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1) yes
2) yes
  • February 26 2014
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Yes you can refinance your condo. You will need to qualify with that mortgage and your current rent.

Once the refinance takes place, the property type will be flipped to an investment propertyand the rates will be a little higher versus a primary . 2 risk factors the investors look at . 1. it's a condo and they already are considered more of a risk because of resale value and 2. it is now an investment property so the rates may come back a little higher but depending on your current rate and what term you refinance into, you may still be able to save significant money.

Good luck and best wishes!
-Scott
  • February 26 2014
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Depends if you are claiming this rental income on your tax returns... (No worries, I am not with the IRS).  You may be able to consider this a second home if you are cnot making the tax claims.  But either way, yes, you can refinance as long as your credit score, income, and LTV% suffice. 

  • February 26 2014
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