Financing after cash out refinance Advice

2 Replies

Hello all,

I recently did a cash out refinance on my single family home at LTV ratio of 75-25. I did this with an owner occupied loan.

My intention with the cash that I have pulled out is to convert my garage into an ADU and to purchase a 2-4 unit property within the city of Long Beach to start house hacking(ideally with a conventional 5% loan).

I was wondering what I need to do to get approved by lenders/ underwriters in the very near term despite my new loan being quite literally just a few days old. I understand that moving from a single family home into a multi-family property is something that most lenders do not find believable when looking to underwrite loans, but I am unmarried with no kids and I am really focused on financial independence and I feel house hacking and real estate will help me in achieving this goal. What are the steps I can take to get around this road bump and ensure lending for future real estate transactions.

For lenders, I am looking to get approved for an approximate 650k loan on a duplex owner occupied with a 5% down payment.
I currently own a 640k single family home with a 480k loan on it (Total PITI $2550 per month) Comparable rents $2500 not including proposed garage ADU conversion which should add an additional $1300 to monthly rent.

My income is 7500 per month, and my only other monthly debt besides the mortgage is my student loan($318 per month currently paused).

I have enough in very healthy reserves and I am actually looking to buy a fixer and value add with my excess cash.

Thank you in advance.

@Jose Leanos    Now that the loan is closed your obligation is 2 fold:

1. To occupy the property for 12 months

2. To pay your mortgage on time

Once you fulfill that obligation you can certainly purchase whatever property you want - assuming you qualify for it when the time comes.  But lenders don't care if you are moving to a larger property with more units.  They just care if you can qualify for it or not.  

Hope this makes sense.

@Jose Leanos on the right track. We would need to look at your credit to see what rate you would qualify for, but good news is you will also be able to consider the rent from the other side of the duplex as income.

I’m happy to connect and answer any questions.