Realtor · Warren, NJ · Member since 2018 · 39 posts · 16 votes
I am in the middle of a purchase for a two family property, definite add value with the addition of one bedroom to both units. My plan is to do the work, make the sqft improvements and cash out refinance 6 months down the road. The question I have relates to a conversation my lender and I had, he is offering me less money to bring to the closing for a higher rate from my experience it’s been easier to refinance if the rate is higher than current market rates. Anyone have bad experiences with a move like this? Is it easier to get the cash out refinance with the higher interest rate or do they only care about the capital improvements and new appraised value?
Rental Property Investor · Hendersonville, NC · Member since 2016 · 446 posts · 412 votes
8y
In my experience it hasn't mattered. It was all based on debt to income and LTV. I would make the decision based on the math and protect for contingencies, i.e. make sure you have sufficient funds to complete the remodel (I like 2x to be safe) and have a plan if things get delayed or the market changes to make sure you don't get stuck with the higher rate for too long.
Property Manager · NJ · Member since 2017 · 786 posts · 396 votes
8y
@Wayne Loux I've never had a bad experience or issue with a cash out refi, its been my experience that this isn't a concern for most lenders. You may want to consider that the interest rates are continuing to creep up, and in 6 months they may be higher than they are now as a result you may want to hold out a bit longer on the refi. make sure that the deal at whatever rate you choose meets your financial objectives just incase you cant refi for whatever reason at the time that you initially projected.
Realtor · Warren, NJ · Member since 2018 · 39 posts · 16 votes
7y
Update on this project. Purchased in July for $242k renovated for 30k worth 300k, took the higher interest rate for some cash at closing. Rate is 6% monthly is $1700 all in. I am renting the two units out for a total of $3250, waiting now for the 6 month mark to cashout refi. Any advice or tips for Brrrr would be great I have not refied other properties I own just bought and held the others.