How do I go about on a Second rental

Question

Hello!

I would like to get a second house by this year but not sure where to start. What are my best options to try and purchase the next home? Is it better to refinance? Or a HELOC? Or just try and apply for a full loan?

Please and thank you.

Janice Carter · Answer

Jake, it really depends on how much equity you have and your overall financial picture. With a 3.2% rate, many people prefer not to refinance and lose that low rate. Instead, a HELOC or home equity loan can allow you to tap the equity while keeping your existing mortgage intact. You could also explore a new loan for the second property if your income and debt ratios support it. It would be smart to speak with a mortgage broker who can review your equity, credit and debt to income to compare the options. If you don't have a mortgage broker and need a referral, let me know.

Caleb Brown · Answer

That depends on what you have available so many variables. If you have capital doing a new loan (conventional, hard money, etc) would work. If you have equity in a property you can tap into doing a refi (run numbers with the new mortgage, payment) or you can do a HELOC. HELOC is a shorter term solution so you'd want to pay that off and not let it draw out.

Sam Tato · Answer

Without knowing details sounds like:

- traditional financing is primary choice (cheaper than heloc)

- heloc 2nd choice, but if your current rental is an investment property or multi-family it's harder to find companies who will offer this, but they are definitely out there as I have helocs on my doubles

- 3rd choice is a refi but it's costly losing that low interest you already have, might not even consider this a viable option, raises the hurdle rate quite a bit

Janice Carter · Answer

Jake, it is possible to get approved for a new loan without tapping into your current home’s equity. Approval will depend on factors like your income, debt to income ratio, credit score, and available funds for the down payment and closing costs. A lender can review your full financial picture to determine what options you qualify for. Which state are you in?  If you wish I can refer you to a licensed mortgage broker in that state. Just DM me.

Tim Kirk · Answer

@Jake Hong would be tough to give up that initial 3.2 rate. Is the original purchase a duplex?

Tim Kirk · Answer

Hi Jake. If you have a 3.2 rate on your first rental, that would be hard to give up unless the loan balance is low.

If you purchased the first home in 2021, have you been saving up since then? Do you have much of a down payment saved up for #2?

How do I go about on a Second rental

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