Hi, I'm an active duty military, separating soon, and new to real estate.
Can you someone at my scenario and see if it would work out?
Buy a house for $200K using VA loan with an interest rate of 4.2%.
Live in it for 1 to 3 months, and use IRRRL to get rid of occupancy requirement (IRRRL rate is 3.999% right now)
Turn the house into a rental property.
And lastly, use the VA entitlement leftover or the conventional loan to buy my primary home?
I'm guessing all these could take place in less than three months (I already found my tenant: my parents).
However, I saw that the banks usually want a 'history of mortgage payment' for filing IRRRL, but I also read that I could shop around and eventually find one that would work with me.
@Chan Jung, I would be careful with this as there are a lot of variables that could affect this. One, some lenders won’t allow you to refinance until after a year. It’s not technically a requirement, but the banks can choose to do that. Two, you are not technically intending to live in the property for more than a year as you signed you were for the original loan. That could be thrown at you as mortgage fraud and they could have a pretty good case for it. Three, the rate of the refinance needs to be lower than the rate you currently have. There is a possibility that will happen in that 1-3 month period, but certainly no guarantee.
I would do some research and see if this will really be an effective strategy for you. Not something I would recommend in most cases though.
@Adam L. Right, the strategy is not a guarantee and there are risks like you have mentioned. I actually found multiple people on BP that has went through this route, so I believe it is possible. I'll definately do more research before making any decions. Thank you.