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Tim Lee
  • New to Real Estate
  • San Francisco, CA
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First time cash out refinance

Tim Lee
  • New to Real Estate
  • San Francisco, CA
Posted Jan 26 2022, 17:17

I'm an out of state investor and I have 2 rentals in DFW. In 2022, I'm looking to do a cashout refinance. I purchased one with cash and the other with my HELOC. Since it's my first time doing a cashout refinance, any advice would be appreciated! Not sure if I should look for lenders in Texas or here in California and how many lenders should I talk to? My insurance agent thought that both properties could be refinanced at same time at a discount? Again, thanks for your help!

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Daniel Kim
  • Rental Property Investor
  • Garden Grove, CA
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Daniel Kim
  • Rental Property Investor
  • Garden Grove, CA
Replied Jan 26 2022, 18:05

If the properties you are looking to refinance are in Texas I would look for a Texas lender. I like my lender because he's here in California (like me) but is licensed in the other states that I want to invest in. I would probably talk to at least three and compare rates. @Philip Moon is my guy f you want to ask him any questions.

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Michelle Foy
  • Real Estate Agent
  • Oklahoma City
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Michelle Foy
  • Real Estate Agent
  • Oklahoma City
Replied Jan 26 2022, 19:05

I would agree with @Daniel Kim. Shop around. I am doing a cash out refi, currently, on the commercial side and one lender said he could lock it at 4.25 while the other said prime plus one that would adjust annually. I consolidated three loans into one. I always advise my clients to shop rates and ask what each lender has to offer over another. It is a good way to get the best deal and oftentimes ultimately be able to work with the one(s) you prefer while saving money. Also, my understanding is that rates will likely increase a few times this year so the sooner the better.

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Replied Jan 26 2022, 19:59

@Tim Lee Hey Tim I'm considering doing a HELOC to buy another property. How did that go for you? I'm scared to pull the trigger because once I do that then I have to wait for that new property to build equity. I feel like it's a slow process in buying homes that way. Does anyone on this thread have any other advice as to different ways to use HELOC?

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David M.
  • Morris County, NJ
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David M.
  • Morris County, NJ
Replied Jan 26 2022, 20:22

@Tim Lee

I look at this differently..  Find a good loan officer.  yes, that's like finding a good real estate agent or a "good" anything.  Message me if you want mine that can originate residential loans pretty much the entire country.

I would recommend that you look for a loan officer that you can work well with.  Also, one that is knowledgable, capable, and willing to work with you to make sure you are getting the right loan product for you.  Usually the ones that hustle and work outside of the 9-5 hours.  That is usually key since you are probably busy during business hours.  You don't want to be chatting with your loan officer while you should be doing other work.  Also, how well do they process your loan for you.

If you are sticking with conforming residential loans, I wouldn't shop around for interest rates.  Unless a lender has a speciality, they are all reselling to the same secondary market (when getting a conforming residential loan).  Don't forget that the loan officer position is still a sales position.  I would be shopping around for the lender's cost.  BP recently is seeing lots of posts where people are being hit with origination fees.  With "regular loan situations" I would never pay origination points.  I'm used to lender's that just charge a flat rate.  I'm not worried about their estimates of everything else (closing costs, prepays, escrows, etc.) since those are just estimates and nothing to do with what they are doing.  Those are specifically related to the deal and nothing to do with the lender themselves.

I wouldn't agree that doing two refi's at the same time would get you a discount.  MAYBE on the lender fee, but those are so razor thin...  

I hope that helps.  Good luck.

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Philip Moon
  • Lender
  • California
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Philip Moon
  • Lender
  • California
Replied Jan 27 2022, 08:49

@Daniel Kim thanks for the shout out. 

@Tim Lee I would definitely talk to a lender to start looking at DTI levels (Debt-to-income) and LTV (Loan to Value). Depending on the loan amount and how much debt you have is how much you can pull from your cash out refi. For investment properties you can have up to 75% LTV and for primary 70% LTV. I work on mostly purchases but can get you connected with someone to help you with that.

AS for the HELOC, it really depends on every situation choosing between the two. PM if you want me to get connected or if you have any general questions. I would love to help!

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Tim Lee
  • New to Real Estate
  • San Francisco, CA
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Tim Lee
  • New to Real Estate
  • San Francisco, CA
Replied Jan 27 2022, 09:08

@Daniel Kim - Thanks for the advice!  Any specific reason why going with a local lender is better?  I'm assuming it is because they know the various neighborhood, etc.  

@Michelle Foy - Thanks for the example.  Yes, will definitely shop around!  

@David M. - I'll send you a message for your loan officer!  Thanks for the insight on origination fees.  Very helpful!  

@William Miller - I got a HELOC on my primary residence, not on my rental. I used cash to purchase my first property and used the HELOC to purchase my second one. Looking to do a cashout refi to pay off the HELOC and free up the cash and look again!

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Daniel Kim
  • Rental Property Investor
  • Garden Grove, CA
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Daniel Kim
  • Rental Property Investor
  • Garden Grove, CA
Replied Jan 27 2022, 13:20

No, I guess there is no reason you need to go with a lender that is local to the DFW properties. As long as they are licensed for the state, I guess it doesn't matter where they are. Other than maybe working with a low appraisal, I can't think of anything else (income verification, proof of property taxes/insurance, etc.) that any 1-800 national lender loan officer couldn't do. I just prefer working with live people that I can email/text/call if I have a question as opposed to faceless names behind a desk, but that's just me. Hope you get that discount... I refi'ed three at the same time in 2020 and asked for one and got some discounts (I think like from the notary and closing costs) but not others...

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Tim Lee
  • New to Real Estate
  • San Francisco, CA
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Tim Lee
  • New to Real Estate
  • San Francisco, CA
Replied Jan 28 2022, 07:46

@Daniel Kim Good to know.  Yes, totally agree!  Prefer to have some kind of relationship with folks as opposed to responding to a computer generated email, etc.  

Just one last question - if I do a cashout refi, the seasoning period is 6 months and then I can use the ARV for the refi, correct? I definitely don't want to use my purchase price, lol.

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Daniel Kim
  • Rental Property Investor
  • Garden Grove, CA
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Daniel Kim
  • Rental Property Investor
  • Garden Grove, CA
Replied Jan 28 2022, 12:33

Yes, that's what my lender told me about seasoning... conventional and VA is six months/FHA is 12