DSCR Refinance for "Subject to" loan

[Austin Lowe]

I purchased a property subject to two loans. The first one is a FHA mortgage, the second is a HELOC. I have grown a little uneasy with how things are going with the person with whom I am paying the loans for, and I am considering looking for alternatives. For my situation I will not qualify for any conventional financing. The following numbers have been rounded to make math a little easier hopefully:

Loan 1 (FHA) balance: $210,000

Loan 2 (HELOC) balance: $50,000

Property is conservatively worth $360,000

Rent would conservatively bring $2100/month

My question:

Would it be possible to get a DSCR refinance loan to pay off the two existing loans? It is my current primary residence, but I understand that would likely have to change as I cannot rent to myself to my knowledge, although if this is not the case I would like to know. Would I need to season the rent first or would it be possible to just use market data? I'm fine getting creative with things and it's certainly a property I want to have long term. If I can provide more non personal details to help with any answers just ask away. Thanks!

[Erik Estrada]

Quote from @Drago Stanimirovic:

Quote from @Erik Estrada:

Quote from @Austin Lowe:

Quote from @Ko Kashiwagi:

Hi Austin,

You would need a lease (cannot be yourself) and have it non-owner occupied. DSCR reliance is possible of subject to with proper documentation. Some lenders may have seasoning requirements so if you've only owned it for a few weeks, not everybody can do this.

When did you purchase this property and gain title?

 I see. I've had title for 7 months. 

Are you currently the vested owner on title? DSCR lenders are going to base the seasoning requirement based on the date when the property was closed and recorded.

Another issue is getting the payoff from the lender. Are you currently making installment payments to the seller or are you also on the mortgage? 

Based on other similar scenarios, most lenders will require verification that you currently do not occupy the property and don't plan on occupying it. 

This is where they may want to see a valid lease in place along with documentation to support you live somewhere else, prior to applying for the loan. 

"You'd need to move out, as DSCR loans are for investment properties only, you can't rent to yourself."

 No I got that part. 

But even if he does move out, he would also need to change his mailing address etc.. to match his new residence usually. Or is that not the case with you guys? 

Also a lot of the lenders I have worked with will do a Lexus nexus or some sort of background report and the property might still show up as his primary residence. Usually they will want to see a lease in place to make sure he is not gonna live in the property... 

They may also want to see his living arrangement. If he is living rent free with a family member and leaves the property vacant, is that still a thing you guys would be able to finance?