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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 If you still want to keep the house after living in it for a while, then you can withdrawn the $117k and pay it off.Putting excess cash into a property is risky and should only be done if the home will ultimately be your retirement home.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.
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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