Refinancing rental property's

22 Replies

Hi all, So I am trying to Refi my rental property's and my personal home. The bank im working with wants to do a commercial loan for everything at 6.5%. I would rather break them up with a loan for each. They say they will not give me a residential loan on any of the rentals. I thought I heard on here people were refinancing rentals with 30 year fixed rates. I am also looking to get some cash out for a siding and window project on a duplex. The bank says that they will roll that into the loan. What do you guys and girls think?

Thanks in advance

Call around to other lenders. 15 year & 30 year conventional loans, as well as cash-out refis, are all available for rental properties. Though not with every lender. Different lenders have different rules and guidelines. It can also depend on how many loans you have in your name. How many do you have? From my perspective, 6.5% is too high if you have good credit. 

Talk to other lenders. If you want individual loans for each property, there are lenders who will do that.

Cash out conventional is nearly non-existent.  Freddie doesn't do them at all and Fannie will only do them if you have four or fewer financed properties, unless you fall under the delayed financing rule, which only gives you six months to do the refi from the date of purchase.

You can certainly get a conventional loan on your residence.  With the right lender you can get them on your rentals, at least for the first three and probably for 5-10 with the right lender.  But you will need to do some serious calling to find someone.

Originally posted by @Kyle J.:

Call around to other lenders. 15 year & 30 year conventional loans, as well as cash-out refis, are all available for rental properties. Though not with every lender. Different lenders have different rules and guidelines. It can also depend on how many loans you have in your name. How many do you have? From my perspective, 6.5% is too high if you have good credit. 

 I have 4 rentals and my home my credit is around 800. I live in a small town in the UP of Michigan there are not to many options 

Originally posted by @Jon Holdman:

Cash out conventional is nearly non-existent.  Freddie doesn't do them at all and Fannie will only do them if you have four or fewer financed properties, unless you fall under the delayed financing rule, which only gives you six months to do the refi from the date of purchase.

You can certainly get a conventional loan on your residence.  With the right lender you can get them on your rentals, at least for the first three and probably for 5-10 with the right lender.  But you will need to do some serious calling to find someone.

 Thanks Jon, They did say they will do my residence with conventional financing. But I need to use some collateral from the rentals because im under water a bit on my home

I did a cash out last year and had over 5. Used the mortgage center in Southfield

Originally posted by @George P.:

I did a cash out last year and had over 5. Used the mortgage center in Southfield

 Thanks George, can you message me the banks info? 

Originally posted by @Kyle Z.:
Originally posted by @Kyle J.:

Call around to other lenders. 15 year & 30 year conventional loans, as well as cash-out refis, are all available for rental properties. Though not with every lender. Different lenders have different rules and guidelines. It can also depend on how many loans you have in your name. How many do you have? From my perspective, 6.5% is too high if you have good credit. 

 I have 4 rentals and my home my credit is around 800. I live in a small town in the UP of Michigan there are not to many options 

Based on this you should be able to find a lender that provides the type of loan you're looking for. I've personally done it before as have many other people here on BP, so it's definitely possible. I know of multiple lenders that do it in my area, but not sure about your area. You'll just have to call around. Keep in mind that it doesn't have to be a lender in your city or even your state. Just one that is licensed to lend in your state. Best of luck to you. 

Originally posted by @KYLE Z. :

... But I need to use some collateral from the rentals because im under water a bit on my home

There goes the reason why. You won't meet the lender's LTV without doing the blanket loan.

Originally posted by @Kyle J.:
Originally posted by @Kyle Z.:
Originally posted by @Kyle J.:

Call around to other lenders. 15 year & 30 year conventional loans, as well as cash-out refis, are all available for rental properties. Though not with every lender. Different lenders have different rules and guidelines. It can also depend on how many loans you have in your name. How many do you have? From my perspective, 6.5% is too high if you have good credit. 

 I have 4 rentals and my home my credit is around 800. I live in a small town in the UP of Michigan there are not to many options 

Based on this you should be able to find a lender that provides the type of loan you're looking for. I've personally done it before as have many other people here on BP, so it's definitely possible. I know of multiple lenders that do it in my area, but not sure about your area. You'll just have to call around. Keep in mind that it doesn't have to be a lender in your city or even your state. Just one that is licensed to lend in your state. Best of luck to you. 

 Thanks for your help!

Originally posted by @Steve Babiak:
Originally posted by @Kyle Z.:

... But I need to use some collateral from the rentals because im under water a bit on my home

There goes the reason why. You won't meet the lender's LTV without doing the blanket loan.

 Yeah I am getting killed on the interest on my house as well. I really blew it on that one lol

Yes, call around. I recently purchased two 4plexes 15 year fixed conventional at 4% and have 2 re-fi's locked at 4% as well today.  30 year were quoted at 5% and that's conventional with more than 4 multi-family financed properties.

Originally posted by @Kyle Z.:

Hi all, So I am trying to Refi my rental property's and my personal home. The bank im working with wants to do a commercial loan for everything at 6.5%. I would rather break them up with a loan for each. They say they will not give me a residential loan on any of the rentals. I thought I heard on here people were refinancing rentals with 30 year fixed rates. I am also looking to get some cash out for a siding and window project on a duplex. The bank says that they will roll that into the loan. What do you guys and girls think?

Thanks in advance

 Fannie Mae has no limited to primary residences so perhaps that particular bank has an overlay to not accept residential loans when you have more than X financed properties or some other restriction.

The question would be what did the bank/lender tell you?

How many financed residential properties do you have where either your name is on title or you were obligated on the loan or both?

Even if you had 10+ financed residential properties you should still be able to obtain a loan on your primary residence.

The non owner property will vary with the answers to the above.

Cash out  like others have mentioned will be a lot more difficult if you have more than 4 financed properties unless you fall within the delayed financing exception.

In certain areas I've found community banks that will offer up to 80% LTV financing even cash out with out limit on the number of financed properties as long as you can show you're credible, and capable for rates around 5.25% 20-30 term.

Originally posted by @Jason Bartley:

Yes, call around. I recently purchased two 4plexes 15 year fixed conventional at 4% and have 2 re-fi's locked at 4% as well today.  30 year were quoted at 5% and that's conventional with more than 4 multi-family financed properties.

 That sounds about right today Jason in terms of pricing for conventional loans. 

Just curious why did you pick to go with 15 year fixed loans?

I've experienced exactly what @Jon Holdman said. I finally found a small lender in FL that would do a cash out refi on a rental condo. My husband and I have more than 4 Helocs/mortgages, and most lenders won't touch rental condos in FL at that point, despite our excellent credit. SFRs are easier than condos.

Fannie Mae has no limited to primary residences so perhaps that particular bank has an overlay to not accept residential loans when you have more than X financed properties or some other restriction.

I think you meant "not limited", @Albert Bui    That's absolutely true.  Both Fannie and Freddie will finance rentals.  Its cash out that's the problem.  After another member brought up this delayed financing exception I did some research and spoke with a mortgage broker.  No cash out refis on rentals for Freddie at all.  Fannie will only do them if you have four or fewer mortgaged properties, unless you meet the requirements for the delayed financing.

Even though fannie will do 10, most banks have trouble with 4 or more.

I do these in Texas various banks, my tip is to create a detailed personal financial statement with full REO schedule. Make friends with local banks and mortgage brokers who specialize in portfolio lending. Have a cover sheet with what you need , your experience and what your income will look like on tax returns.

Present with your Personal financial statement to local mortgage brokers and banks. Treat like job interview (your competing with other borrowers to get a loan, be sharp). The banker will know immediately if you have the financial strength for a loan or even if you may qualify for a fannie (15 - 30 year loan).

Monty

Those may be the limits for that one particular mortgage broker.  A lot of banks have overlays on top of the agency credit guidelines. @Jon Holdman I have access to direct seller servicer (no overlays) guidelines and can deliver cash out's to freddie mac even for non owner scenarios, if the borrower has 1-4 financed properties since only Fannie does up to 10 financed properties.

@Jon Holdman  

 and @Albert Bui  

You guys keep saying if you "meet the requirements for the delayed financing."

Can you please help me out by defining what you mean by delayed financing and what requirements it has?

Thanks in advance

In essence you must buy all cash with no financing and funds used to buy must all be from your sources whether cash, borrowed, savings, retirement etc. 

If you purchased like this then you can cash out immediately up to 70% of market value up "till," your acquisition cost which consists of purchase price and closing labeled on the bottom right of your final HUD1. It's important to note this does not include your rehab costs back. There are other strategies to get back your rehab that involves more creative structuring.

If you'd like more detail you can always Google delayed financing exception Fannie Mae it's publicly available.

@Bryan Loveless   If you have more than four mortgaged properties, you can only do a cash out conventional (i.e., 30 year fixed) refi within six months of your purchase of the property.  Fannie will buy such loans.  Freddie won't buy cash-out refis at all.  This is information from June 2014.  Rules may have changed.

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