Cashout Refinance on Duplex LTV 70%??

6 Replies

Well, I got some bummer news today that I just wanted to confirm with some experienced investors . The maximum cash out refinance LTV on a duplex is only 70%?? I do not reside at the property, it is completely a rental property with 2 units.

I'm expecting to be ready to purchase another multifamily property within the next 6 months, and I was planning (thanks to this forum) to cash out refi and use that money toward the down payment of that new mortgage. Because I have a conventional loan on my duplex, and I will be living in my next property, I will be eligible for the FHA at 3.5% downpayment.

My home value is 100,000

My mortgage balance is 72,500

I was contacted by a loan officer recently who had informed me that max LTV on my rental was 80%, however today another company told me it was only 70%, and I did find an article online stating that was the case.

Obviously 70% of 100,000 is only 70,000.  If my balance is 72,000 then obviously there isn't anything left to cash out.  Am I only going to be eligible for a conventional refinance? Should I keep my mouth shut and see what happens with the lender that stated 80%??????

My current interest rate is a ridiculous 8.125%, so I plan to refinance no matter what. If I am unable to cashout with this refinance, does anyone know if I would be able to get a HELOC or even just a home equity loan somewhere within a few months of a conventional refinance??

Or is there another route I should try and pursue in order to tap into the equity that I do have? Any thoughts, comments, or suggestions would be appreciated.  Thanks in advance!!

@Jared L Getz

The max cash out for a unit property is going to be 70% if you're looking for a conventional loan.

I would ask that L.O. (Loan Officer) if he/she is doing a conventional loan and call them out on it so that you don't waste your money on appraisal fees etc.

If you do a rate & term or limited cash out (2K or less) refinance you can go up to 75%

With your rate being so high a refinance is probably a great idea.

I hope this all helps and have a great day.

@Shaun Weekes ,

Thanks for your help. I have been specifying that I need the conventional loan refinance because I need to be FHA eligible for my up coming property purchase. If you don't mind I do have a couple questions about your reply.

For starters, I take it you are saying that a conventional refinance does not need to be appraised? If not, can you elaborate on why and tell me how they verify the home's value? I used zillow to get a rough idea on my property, I'm sure most loan officers use similar software or websites?

Also, could you just take a minute to expand on "rate and term" and the "limited cash out" you mentioned?

And because I won't be able to cash out (much, anyway),  if anyone has any thoughts on my chances of getting a home equity loan shortly after this refinance I would love to hear it as well.

Thanks. 

@Jared L Getz

Conventional loans require appraisals unless the automated underwriting system says no.

Rate and term just means that you only refinance for a better rate and a better term.

Limited cash out means that you would like to take out 2K or less in cash in your hand.

Cash Out Refiances are cash out in your hand higher than 2K.

I hope this helps and have a good one.

@Shaun Weekes .

Thanks for the clarification.  I'm starting to get my head on straight as to how I'm going to approach everything.  

@Jared L Getz There are plenty of lenders that will do 75% LTV on a cash out refi for you. Have you tried B2R or Visio?

Hi @Jared L Getz You can get 75LTV. I work with a lender that can do that and a better rate than your 8.125. They base the loan on the income of the property not the borrower and can close quickly. Although even at 75 - 80 LTV and the amount of your current mortgage it's not likely to get you any extra money. You will need an appraisal too. Let me know if you're interested. Inbox/PM me.

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