Pulling equity from a mortgage free rental

Jacksonville, Florida
Mortgage Brokers & Lenders
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Pulling equity from a mortgage free rental

Reya Ripet
Member since 2021 · 44 posts · 34 votes

Hi all !

I own two rentals mortgage free.  I am unemployed other than my rental income.

If I walk into my local bank , how would I proceed with this? 

I would like to pull out the equity value from one of my rentals.  How much would this amount to , the value on zillow ?

If I would use this cash on another rental , I would own that rental outright ? 

I just would owe the equity amount on the house I pulled equity from ?

Will a bank always give equity loans ? 

Will they ask about employment status ?

My credit rating is excellent .

Thanks

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  • Malcomb StapelPro Member
    Investor · Topeka, KS · Member since 2020 · 669 posts · 488 votes
    4y

    @Reya Ripet  Answered in the order that you asked them.............

    You will most likely need a DSCR loan product.

    The value will be based on the appraisal done by a certified appraiser, hired by the bank, and paid for by you in closing costs. 

    You would own the rental outright if you had enough cash to cover the total purchase costs.

    Yes, you would now have a mortgage on the property you pulled equity from. 

    No

    Yes

    Good

    Your welcome

    0Reply
  • Reya Ripet
    OP
    Member since 2021 · 44 posts · 34 votes
    4y

    Thanks.  Based on what I said do you think the bank would approve this equity pull loan ? 

    I have zero debt , and have savings.

    Thanks

    0Reply
  • Account Closed
    Wholesaler · Euless, TX · Member since 2021 · 8 posts · 5 votes
    4y

    I googled DSR loans in Florida, and found what is pasted below on the lenders website. Your best bet is to find a lender that offers a DSCR product and talk with them through your situation. Based on what I am reading below, you would likely be approved as long as the new mortgage payment does not exceed the rent collected on your properties. But only the lender can tell you 100%.

    ---

    What Are the Requirements for a DSCR Loan in Florida?

    For a traditional Florida mortgage loan, you'd have to submit your pay stubs, bank statements, credit history, proof of employment, among other information, to be accepted. With Florida DSCR loans, all you have to do is figure your DSCR for a rental property and apply for a loan based on that. A DSCR of at least 1 means you're generating enough rental income to pay for the annual debt related to that rental property, making it easier to get a loan and make monthly payments. When you apply for a DSCR loan with Griffin Funding, you'll also be required to make a down payment, which can be as low as 20% in some cases.

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  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    4y

    @Reya Ripet I am in the process of doing this now. My investment SFH is worth conservatively about $205,000 and I am looking to pull out $130,000 due to a renovation I'm having to do on another property unexpectedly.

    My bank is requesting my W2s, most recent bank paycheck stubs, and my 2021 tax return as well as taking into effect the rental income from the property.

    I'm thinking they must be doing a conventional loan and not a DSCR loan. I believe I locked in at 5.25%.

    You might have to go to a couple of lenders but should be able to accomplish this.

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  • Steven Goldman
    Lender · PA · Member since 2019 · 533 posts · 461 votes
    4y

    A DSCR only lender will let you take up to 75 percent of your equity, as determined by appraisal, so long as the rent covers the principal, interest, taxes and insurance. These lenders only consider the DSCR ratio and your credit score. They do not consider your income other than the rent on the target property. So with that in mind you can cash out refinance.

    Be aware rates on all financial projects are rising and the DSCR market is no different. We are receiving new rate sheets twice a week. Rates are rising around .125 per week. DSCR lenders do not lock your rate until complete submission of documentation, title and appraisal so do not delay or it will cost you dearly. Good luck.

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  • Reya Ripet
    OP
    Member since 2021 · 44 posts · 34 votes
    4y

    Thanks. Could I apply for this DSCR loan online anywhere?

    0Reply
  • Melvin ListBusiness Member
    Lender · Tampa, FL · Member since 2016 · 1k+ posts · 381 votes
    4y

    @Reya Ripet there are tons of programs out there that will allow you to pull out your equity without out have to show proof of income.  As long as your credit is good and the rental amount covers the mortgage payment you should be good.

    C2 Financial
    WebsiteView Page
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