should i let the lender know that i plan to refinance?

Question

I am looking at a single-family home in Laredo, Texas listed at 70k with an ARV of around 110k. My plan is to get an FHA loan, fix it up, raise the value, and then cash out refinance 80% LTV after 6 months if possible. I was wondering if I should let the lender know about my plans to provide certainty that ill be able to make the payments because I won't have much in reserves after closing other than for the renovations and I only make 36k a year.

Trevor Reed · Answer

Lenders will mostly care if you plan on refi before 6 months - they have to return all the comp and no one wants to work for free nor would you want to do that to them.  Let them help you game-plan and maximize that refi.  I've walked through the very thing you are outlining.  Just be careful that you aren't buying the home as a rental under the guise of a primary home - that may put you and your lender in a tough spot.

Carlos Flores · Answer

@Jonathan Stone yes I plan on living in the property until I can rent it out and yes I’ll be using a 203k loan for the repairs.. thank you for your feedback Jonathan I’ll be reading the thread you recommended!

Jonathan Stone · Answer

I can't think of any reasons not to let them know.  Just make sure you have cash reserves beyond just the funds for repairs.  Are you planning to live in this place?  Is this an investment property only?  Are you doing the work yourself or hiring contractors?  Do you have the cash to do the repairs through the escrow as part of the HUD?  Did you consider a 203k loan that would include the repair costs if you don't have the cash on hand?

I know I dumped a bunch of questions but you didn't provide a lot of context.  If you are planning to BRRRR and this is your first deal and you have limited capital/income, check out the thread below.

https://www.biggerpockets.com/...