Criteria for refinancing

[Jeremy Williams]

Hypothetically I've been approved for a $70,000 loan being 70% of the purchase price of a duplex with an arv of $120,000 . once I'm into this property and I complete the required 5,000 in rehab, I'm heading to the bank for a refinance with 45,000 in equity. A normal refinance at 80% of the value gives me a 30yr fixed of 84,000, I think. Doing this in my head but I digress.

The questions

Does my credit matter with a refinance?

Does the amount of time at my job matter?

Can I refinance for the entire value of the home?

Do I need to show potential rental income?

Is the bank or credit union going to hand me a check?

Does a refinance hurt or help my credit?

Thanks anyone who can assist. If there is anything I can do to help you, let me know💵😃

[Bryan Martinez]

Hey Jeremy,

I work with a private capital lender. I can not speak for all lenders but here is an idea for you. With us the max LTV for a refinance is 75%. That would put you at a loan amount of $90,000. Keep in mind there will still be title and closing cost to be paid and with some lenders have fees as well.

1. Does my credit matter with a refinance? - Yes

2. Does the amount of time at my job matter? - Typically with traditional lenders yes this can matter. With private capital that focuses on investment properties this may no matter. For us it does not matter, we do not look at your personal income at all. We look at the cash flow on the investment property. 

3. Can I refinance for the entire value of the home? - No, with us specifically max refinance is 75% of the appraised value.

4. Do I need to show potential rental income? - Typically if you have not owned it for 2 years and can prove that income on your tax returns a traditional lender will not use rental income. We look at the lease(if it is leased) and we also look at the 1007 market rent analysis we get from the appraiser when the appraisal is done. Our loan our based off of credit score and cash flow on the property. So we use the rental income based on the lease or market rent analysis. 

5. Is the bank or credit union going to hand me a check? - Funds are typically transferred to who it is owed too and any cash-out funds will be transferred to your account. 

6. Does a refinance hurt or help my credit? - I am not a credit expert so this one is hard to answer for me. 

I hope this helps you out!