New member looking for lender advice

4 Replies

Hi everyone, been loving the biggerpockets podcasts and wanted to introduce myself on the forums.

A little about my wife (Ashley) and my situation.

-owned our primary residence for 4 years

-interested in making an offer on a friend's fixer property, they selling due to devorce.

- owe 330000 on our house it is worth 480000

Looking to cash out refinance to put down payment on a new loan

Quick question

I have submitted cash out refinance applications with usbank (our current mortgage holder) and peeny Mac online.

Any suggestions of other places to look for a down payment for a new house. We plan to rent out our now primary residence and live and fix up this other home.

Is it a bad idea to shop for refinance and pick the best deal or will most be equal. 

Once we get a cash out approval we will be looking into prequalifying to make an offer

Hope I wrote this ok. I'm very new to investing in real estate and would love some help. 


Travis and Ashley

Hi Travis,

For a start, I think it's a great idea to start with refinancing your primary residence! 

Other options include:

  • retirements accounts
  • private lenders (like your friends and family)
  • personal loans

But refinance would be my first bet as well. Shop around for better terms that work for you and go for it!

Which type of lending are you planning to get for the fixer property?

Hey Travis, sounds like a good start using that equity for a second property.  A few other things to consider:

-If your plan is to mortgage the second property you should verify beforehand that the refinance on your current primary residence won't push your debt to Income ratio too high to get approval on the new mortgage.  Someone correct me on this if I'm wrong but in your situation I don't believe a lender will count the potential rental income of your current primary residence if you're still living there while applying for a mortgage on the second.  

-You mentioned this is a rehab property, depending on the extent of rehab it needs you may find the property is not eligible for some mortgage products.  What kind of renovations are we talking about?

Should I put in more applications. Any suggestions on where to look to? (More big banks? Credit unions?)

Should I be doing pre approval at the same time for a purchase?

We have 760+ credit scores does running to many numbers make us in risk of dropping below 740?

Its a pre forclosure. It has non structural concrite damage in the back yard. A bathroom remodel that is not completed (in usable bathroom) stucco damage on exterior and exposed slab from in finished flooring project. 

Her ex was a diy guy that has a lot of partially completed projects.

I am an electrician/ general construction worker. I'm thinking 25,000 in material costs for me to do the work. But in the condition it is in we could still move in and airbnb one of the rooms like we do now in our current home 

Us bank said our current debt to income is 23% so we are pretty good on that front. We have good sized savings and 401k. 

@matt We were told if we had 6months reserves for an investment/rental we should be ok.

Thanks guys

@Travis Wagner

I would recommend you max out the financing on your primary residence. Get the highest amount of cash out you can (typically 85% on conventional owner occupied single family).  The bathroom of the new purchase is going to be a problem.  Unfinished projects will become financing problems.  You may want to get a renovation loan (something like hard money) to get the property renovated and then refinancing that into a longer term vehicle 6 months down the line.  You would be able to get the downpayment to about 20% and 100% of the renovation would be covered in the loan on a draw basis if that's an issue.  

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you