Cash out refinance for duplex which is my homestead
I own a duplex in Dallas, TX. There is an apartment upstairs which I rent out which is 1/3 of the building. I live downstairs and claim this as my homestead. My insurance and property taxes are also set up in this manner. I applied for a cash out refinance on my mortgage and was told I could not because the property is a duplex which I claim homestead. Is this correct?
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#2 Creative Real Estate Financing Contributor
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Quote from @Malaree Thompson:
I own a duplex in Dallas, TX. There is an apartment upstairs which I rent out which is 1/3 of the building. I live downstairs and claim this as my homestead. My insurance and property taxes are also set up in this manner. I applied for a cash out refinance on my mortgage and was told I could not because the property is a duplex which I claim homestead. Is this correct?
@Malaree Thompson yes and no. Fannie/Freddie do NOT allow:
Texas Section 50(a)(6) Loan Security PropertyA Texas Section 50(a)(6) loan must be secured by a single-unit principal residence constituting the borrower’s homestead under Texas law. Loans secured by two- to four-unit properties, investment properties, or second homes are not eligible.
https://selling-guide.fanniemae.com/Selling-Guide/Originatio...
However, there is NOT a state law against it but because of the above most lenders even if they are not selling to Fannie/Freddie do not allow it. However, there are few that do allow. We do it often, the drawback is rate is going to be higher then a Fannie loan. but, we do it all the time.
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The law does not cover two unit properties which is a principal residence. Nonetheless, BoA won't refinance with cash out.
Jay, thanks for the response.
#2 Creative Real Estate Financing Contributor
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#2 Creative Real Estate Financing Contributor
- Lender
- Dallas, TX
Quote from @Malaree Thompson:
The law does not cover two unit properties which is a principal residence. Nonetheless, BoA won't refinance with cash out.
Right, because B of A sells their loans to Fannie/Freddie which does not do 2 unit cash out in Texas there BofA does not have a product to sell you.
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Lender Alabama (#69841), Virginia (#MLO-35815VA), Texas (#323441), Pennsylvania (#64778), Oregon (#323441), Louisiana (#323411), Iowa (#31166), Georgia (#55988), Florida (#LO40080), and Colorado (#100506224)