Creativity Needed: New Primary Loan & Need to Close New Deal ASAP

[Mason Greenly]

Hi! I need help with mortgage regulations in Texas and help coming up with a creative way to purchase my next deal.  This is a bit complex, so bare with me...

I have been searching for deals in a specific neighborhood for two+ years and used MLS, direct mail, personal relationships, etc. and recently closed on my first property. Here's where things get complicated...

I needed a primary residence, so I purchased "Deal A" deal thinking I would live in it for a while until I found something better (properties in this neighborhood rarely come up for sale). I closed the loan about a month ago as a primary residence. Remember this was 2+ years in the making.

Then, as luck would have it, a week after closing Deal A, I got a call from a person I sent a direct mail letter to seeing if I was interested in purchasing his property. His property has two single family residences on it. One is currently leased (house 1 Deal B) and the other house is vacant (house 2 deal B) and is the ideal house I've been searching for for my primary residence - we'll call this one "Deal B". I called my mortgage company and explained the situation and they said it was no problem and they'd finance Deal B as an investment property (with the understanding we'd be living in house 2 of Deal B). This seemed like a win-win for everyone. Now, two weeks before we're supposed to close, the mortgage company is saying I need to refinance Deal A as an investment property and turn Deal B into my primary residence loan. They quoted nearly $15K in closing costs to ReFi a deal I JUST CLOSED ON (includes 7K that would go toward principal/75% LTV). They also said I would need a brand new appraisal (other isn't even a month old). This causes several issues: significantly more cash up front to close on a deal that just closed, pushes the timeline out for closing Deal B and I'm under contract to close in two weeks, makes this whole process a money-pit mess that makes it much longer for me to get a return on Deal A. I'm more inclined to let Deal A sit vacant for 6 months (total of $4800) than have to refinance it (if that's how it would work).

Questions:

-What are my options to get this done and close on Deal B? I can't let this opportunity go!

-What is the cheapest way to get Deal B and live there instead of the house from Deal A? Deal A will provide great cash flow for a SFR and is less desirable for me and my family when compared to Deal B. We want to move directly into Deal B and rent Deal A.

-Would you refinance a loan you JUST closed just because a lender is telling you that's the "only" way to do it?

-How would I handle insurance if Deal A is supposed to be primary residence but I actually live in House 2 of Deal B?

The rough numbers are: Deal A: $110K purchase price. $800 PITI & Exepnses. Will cash flow approximately $400/month. Already put 20% down + closing costs at closing a month ago. 30 year loan.

Deal B: $285K purchase price. Planning to put down 25% and have 30 year loan term. The current tenant from house 1 of Deal B pays $1000/month + all utilities and expenses (metered separately). I would assume additional PITI & expenses for house 2 of deal B and use it as my primary residence.

Please help! I am determined to make this happen but need to figure out what's best for ME and not just follow the lender's lead! 

[Cody L.]

Dude, my head started spinning reading that.  Maybe make it shorter?  Why not buy the second property as an investment property and keep your current one as your main?  Who cares which one you really plan on moving into at some point.   Also I have two "main" properties.  One in Houston, one in San Diego.  They're both "primary residences".  Lots of people own more than 1 house for themselves.    It just so happens I have someone renting one of those primary residences.