To Finance Or To Walk Away?

[YiBing T.]

Hello all,

I am fairly new to the BRRRR strategy, currently, I am trying to do a cash out refinance on a property so I can put down for another property. The lender I am working with can only lend 70% LTV, the appraisal just came back 10k less than our anticipated value. I would like to check in with our BP community, what would be the best course of action at this point? Accept the 70% or walk away to a 75% LTV lender that potentially cost higher?

Yibing

[Steve Vaughan]

Originally posted by @YiBing T.:

Originally posted by @Steve Vaughan:

Darn. Thought this was a creative question ;)

If residential like a house, my and I think most conventional residential lenders loan up to 75% LTV on rentals/non-owner occ. 70 is conservative. Just check with any local bank or mortgage broker. They should be able to use your same appraisal within 60 days or so.

Commercial will pretty much have a cap at 70% LTV. What are you financing @YiBing T.?

Hello Steve, thanks for your input. I am new to this. The property is a townhouse that was converted into a duplex. Lender offered me 75% LTV, but the points and the APR are a lot higher than the 70% LTV. In general, it seems a high LTV = high loan cost. If you were given a choice of high LTV with high cost VS low LTV with low cost, your goal is to keep the property long term, Which one would you go with?

I'd go with the lower costs vs getting another 5% out. I'd try a diff lender. I did a 75% LTV cash out on a rental home last fall with really low costs and a 4.25% 15 yr fixed loan. 30 yr would've been 4.625% but no extra fees. I used a community bank.