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Refinance info and advice please.. Refinance now or after

I have a property that's rented out.. I live with my parents at their house.. I just got married.. I like to refinance before I move out to the rental property.. Can I refinance when there is a tenant in there, or should I move in before I refinance? What's effect will it have on my new interest rate? Here's my info: 1st mortgage 490,000 2nd mortgage 53,000 This is my plan: I would like to put 90,000 cash into the first mortgage and pull out 100,000 from my parents paid out property that we currently live in and refinance the 1st from 300,000 and leave the 2nd mortgage the way it is.. What are my chances in doing this? Or is there a better way in working this refinance?whats your advice? Thanks
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October 17 2013 - Fairfax
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Answers (8)

Wait until you move in.  Rates for owner occupied property is less than for investment property.

In your scenario, since you want to leave the 2nd as it is (future usage?), then the way you describe is the only way.

My advice is to weigh the pros and cons of creating a payment on the parent's home, taking $90k out of the bank against how much the mortgage payment would be reduced at today's rates.

I would get the first lien down to the conforming limit of $417k.  $417k at 4.125% is a P&I of $2020.99.  $300k at 4.125% is a P&I of $1453.95.

The difference of $567.04 divided into the $117k is 206 or 17 years.  Better to keep the $117k in the bank where it is safe from declining markets.  If you still want to keep the house after living in it for a while, then you can withdrawn the $117k and pay it off.

Putting excess cash into a property is risky and should only be done if the home will ultimately be your retirement home.  If you plan to sell it, then the excess cash will just be given back to you at closing.

Just my humble opinion after being burned by this housing market.




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October 27 2013
You should be able to do it now or after you move back.  If you can wait the rate may be lower when you live there.  If you have fear rates will be higher when you move back then you could start the process now.  Feel free to contact me via my profile if you like.
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October 26 2013

How do you plan on getting the money from their property?  Do your parents have a HELOC?  If not, it might be smart to have them set that up now.  If they're doing a cash-out refinance instead of a HELOC you may want to have to have them start that process now so the money is ready when you are back in.

Others have answered already, and I would agree that its best to wait until you are in the property to obtain better rates, rates between primary and investment properties with 25% equity are about .25 - .5% higher.  However, if your timeline for moving back in is long enough and rates go up you risk ending up worse off vs. refinancing now. 

Also, an underwriter will look very closely to prove you are actually living in the property now (paystubs, bank statements, etc) will all need to validate that you are actually occupying the property.

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October 18 2013
Good morning, you have asked excellent questions. To the first, return the home to your primary residence for refinancing. The second is harder to answer without more information, but it sounds like your plan is a fair starting point, whatever lender you choose will be able to cover this question in full detail and you will be able to see clearly which option is best for you.
Congrats on getting married!  Best wishes, Jim
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October 18 2013
I agree with moving back in to the home as the rate would be lower for you!
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October 17 2013
Hi there ,
i can definitely help you out with all this.
contact me on my profile here or call me.
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October 17 2013
It would be much better for you to live there and refinance as you are gong to get a much better rate and term.

Right not, its a rental, when you move in it will be your primary.

How much is the home worth?  Do you know what type of loan your first mortgage is?

And, you want to refinance the home that your parents live in and pull cash out of that?

A bit confused.  

Contact me through my profile, I am here to help.

We are a National Lender that has been open since 1905.

Thank you and good luck!
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October 17 2013
if you refinance  now ( with renters in it ) the new loan will be priced  for a " rental property "  ( which will be  slightly higher rates/ fees )

you should contact a lender to work with and find out  the differences between  refinancing it a rental and  refinancing it as a primary  residence  PLUS   find out how long you will need to live in home  before being able to  do the loan as a primary residence
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October 17 2013
 
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