Refinance a house hack 4plex for another house hack 4plex

11 Replies

Good afternoon everyone. Hopefully someone has done this before. 12 months ago I bought my first real estate investment. A 4plex with an FHA loan. I am currently living in one unit and renting the other 3 (house hacking). I want to get started on my 2nd deal one year later (which is now) and want to purchase another 4plex to house hack with an FHA loan. I visited a local bank today but they want to do a conventional loan at a 6% interest (I currently have a 4.25%) and do a 20 year fixed rather than a 30 year fixed. My monthly payment will now increase to $320 a month washing away my cash flow.

Has anyone done something like this before and what methods have you used. I really want to go with another FHA loan with the next 4plex but the numbers need to make sense when refinancing the one I currently have.

Thank you very much in advance and Happy New Year. 

@Daniel Hinojosa I would also check with a broker on any FHA program. Depending on your scenario you might find better terms. Was your score very low a year ago? FHA rates were not that high a year ago unless your score was very low or the lender had a huge margin built in.

@Daniel Hinojosa , nothing wrong with ambition. So long a you bought a super-bargain a year ago (ie. already having achieved 20%+ equity?), you should be able to refi out of your original FHA-approved loan. Keep in mind that to refi into a conventional non-occupant investment loan, it will be at a higher interest than your next FHA owner-occupier house-hack loan.

Congrats on your progress so far. All the best for 2018...

@Daniel Hinojosa holy rate batman. You're talking to the wrong bank/lender. Conventional, investment property loan rates are in the low 5's, and you can absolutely do a 30 year term. But the max LTV on a 4-unit IP refi is 75%. Do you have 25% equity yet? If so, PM me and I can get you in touch with a rockstar LO that won't bend you over on the rate.

Or perhaps you're getting those terms because you don't have enough equity for Conventional financing and they are giving you a portfolio product.

Either way, if you want to house hack another 4-unit with 3.5% down, then FHA is your only option. And you'll need to refi out of your current FHA loan in order to get a new FHA loan.

Thanks everyone

No, I didnt have a low credit score. This was at the beginning of the year when the interest rates hiked to 4.25 (I was at 720). I do not have 20% equity, but I wanted to free up my FHA in my current house hack to do it all over again without putting a large amount down.

Originally posted by @Daniel Hinojosa :

Thanks everyone

No, I didnt have a low credit score. This was at the beginning of the year when the interest rates hiked to 4.25 (I was at 720). I do not have 20% equity, but I wanted to free up my FHA in my current house hack to do it all over again without putting a large amount down.

 Good luck with that...

What about the loans out there for 5% down? Keep us posted on what you find and as the podcasts constantly says, if one says no, go to the next. 

Originally posted by @Natalia Soares :

What about the loans out there for 5% down? Keep us posted on what you find and as the podcasts constantly says, if one says no, go to the next. 

 You could be right about that. I just became aware of Homestyle Loans - for Investors. Under certain circumstances (single unit investments), they lend up to 95% LTV!

[However, that'll still disappoint the OP, who's only after 4plexes]...

Daniel,

From what I understand you are required to stay in an home for two years when using an FHA loan. After that you should be able to get another FHA loan on the next property without refinanancing the first. Why not wait another year then get another FHA loan on the next 4-plex and keep the old loan with the low interest rate?

@Daniel Hinojosa Considering your credit score and assuming you have a stable income, have you considered going with a 5% down loan? Refinance will probably cost you points and as well as a higher rate on the conventional loan. Why do that? Use your current FHA loan and get a second mortgage using conventional finance. If you plan on holding on to the properties, it doesn't make too much sense, in this environment, to convert to conventional financing and get a second FHA loan.

At the end of the day, you'll be doing extra steps to achieve the same outcome - 1 conventional and 1 FHA loan.

@Anthony G you're only required to stay in an FHA loan property for 1 year before you're allowed to move out and keep it. Also without special circumstances you may only have 1 FHA at a time. to the op I would keep the FHA you have until you get 25% equity, and use the conventional to get the 2nd 4plex, even if getting a 5% down loan will force you to get PMI.

@anthonyG 

@Anthony G I was under the impression you can only have one FHA loan at a time and not two like you mentioned waiting a 2nd year to get my second FHA. @Omar Khan I think i will go with a conventional loan in my 2nd property and give the 20% down and wait until i have 20% equity on my 1st 4plex property. It was just a great year house hacking the 4plex that I wanted to repeat it again this year with another 4plex without giving that much down or going high on interest. 

Thanks everyone, really appreciate the info!!!

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