LTV on rate and term refinance

[Naveen Kumar]

I have a quick question on rate and term refinance:

If I buy a 100k property with a private mortgage of 90k, and the property appraises at 100k, will the bank be ok with a rate and term refinance loan for 90k, or will they cap it at 70k (at 70% LTV)?

Thanks for helping out a newbie.

thanks

Kumar

[Rashad Luckett]

@Naveen Kumar@Neil Sinha

This is the strategy I used on my last 3 properties. Although I have not seen any 80% LTV on investment properties only 75%. I make sure that my purchase + rehab is 75% or less of ARV and that is what I have as a private mortgage from my LLC. As long as the appraisal comes back solid, I can get all or most of "my" cash out then do it again. Here is an example of my latest one......

Purchase Price: 45k

Rehab: 22K

Mortgage from LLC: $67k

($500/mth interest only for 11 month with 67k due on 12th month, and yes I actually make the payments to my LLC and provide the canceled checks to the bank. Most times that is only one check because I generally don't take on rehabs that I cannot finish in 30-45 days. I also factor these payments into the rehab cost along with other estimated closing costs to ensure I get it all returned)

Appraisal: $90k

New Mortgage: $67k with traditional lender (check for $67k to my LLC at second closing to pay off initial mortgage)