Brooklyn, NY · Member since 2015 · 40 posts · 4 votes
Here's the scenario:
I currently own a 3 family home in New York that has been appraised at 1.1M in the recent months. I currently have a HELOC out for about 150k for expenses that I have incurred over the past few years. I am looking into pulling out some equity and making an investment into another 2 or 3 family home to buy and hold and create some type of passive income.
My question is what are my options? I have heard a cash out refinance can pull out a substantial amount of money from the house (I would need anywhere from 300-500k for down payments and renovating). Are there lots of stipulations and hoops to jump through to do something like that (active income, other assets)? I know that the rent from the investment property would not count as my income when applying.
If anyone could shine some light on this subject I would appreciate it greatly!
Lender · San Diego, CA · Member since 2016 · 41 posts · 30 votes
9y
@Anthony Talpak a couple questions to give you a better answer. In addition to the 150k HELOC how much more do you owe on primary for the multi family? In a conventional cash out refi you are able to take up to 70% LTV. Most lenders will want to pay off the HELOC as well to do the refinance. With a 1.1million appraisal your looking at a max LTV of 770k, minus the cost of the HELOC at 150k gives you 620k. From there just minus the amount you owe on the primary mortgage to give you the amount you can take in cash out. Additionally you have to remember most lenders will require PITI reserves of either 3, 6, or 12 months depending on your credit and DTI. I'm not sure why you believe you are unable to use your rental income in qualifying as you must to offset the PITI monthly obligation of the investment property, the documentation a lender will use to verify your rental income will be either your Schedule E on your tax return (regardless if you reported rental loss or gain, as this will positively or negatively affect your DTI) or current lease agreements in most cases both. If you have any questions please feel free to reach out!
Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
9y
@Account Closed
Too many qualification questions to know which way to direct you. You may have to go with a no income verification loan to refinance your current property, and if so, depending on your credit, you can get 25-30% down. That would get you the cash you need, depending on the other liens on the property, to complete the other transaction.