Can I refinance a primary residence loan if I'm now using it as a rental property?
If I have a property in a primary residence 30-year conventional loan and I am now using it as a rental property, can I refinance it in the same primary residence loan, or would I get higher investment property rates?
If it is no longer your primary, you would get investment rates on a refi. The first question always asked is, "Are you going to live there?" If the answer is "no", it will get investment rates. Also, if you are going to cash out refinance it, your rate will be even higher. Each item you tack on adds to the risk for the lender, so the rate goes up. A straight refi on an investment will be more than on a primary, and a cash out refi will probably add on .375 to .5% in my experience. If cash out refi-ing your property, you will be expected to leave at least 20-25% equity in the property.. sometimes some lenders push it to 30%.
Randy
@Randall Alan Thanks! Very helpful.
Usually you can move out after living your primary residence for at least year. It depends if you refinance as cash out or rate/term but yes in general rates for investment properties are typically higher and lower LTV being able to pull out. What's your scenario? What is your current rate for the existing primary? You can potentially look into HELOC where rates are typically more justifiable for primary. Also, you will only be required to payoff whatever you pulled in terms of funds +interest.
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Quote from @Matt Wells:
If I have a property in a primary residence 30-year conventional loan and I am now using it as a rental property, can I refinance it in the same primary residence loan, or would I get higher investment property rates?
If you don't live there, it would be an investment property.
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Quote from @Matt Wells:
If I have a property in a primary residence 30-year conventional loan and I am now using it as a rental property, can I refinance it in the same primary residence loan, or would I get higher investment property rates?
Hey Matt,
Unfortunately you would need to refi into an investment property loan. But fortunately the rates aren't too far off from what you would get on a primary loan
Why do you want to refi? To get cash out? Has the property been on your taxes for 2 years? If so, it is a "business" in the eyes of lenders and you can do a rental refi, but rates are probably higher than when you bought it. Do a Heloc instead if you are trying to pull cash out to reinvest.