I've finally found a property I like and it's going to be my first rehab.
I have 60% of the $$ and I want to borrow against my primary residence for the other 40% and cost of rehab.
I'm torn between all my options. My current mortgage is at 3.75% and the lender has given me four options;
- cashout refi up to $417K loan
- second mortgage
- second mortgage + HELOC combo
- cashout refi + HELOC combo for upto 95% loan to value - this is what he is recommending
He's quoting me a cashout refi @4% with roughly $4K in closing cost or 4.125% with lender credit of $2876 and 5.26% APR on HELOC with $450 loan fees. with this option, I could potentially get up to $150K, if the appraisal value comes back close to what my agent estimated my house to be worth.
I'm a bit hesitant with this option, because it will raise the interest rate on my primary residence mortgage by potentially 0.25 - 0.325%
I'd prefer a second mortgage + HELOC for 95% loan to value, but his company does not offer second mortgate + HELOC. He's referred me to KeyBank for second mortgage + HELOC
Here are the specs on the rehab
- purchase price $110K
- property taxes $6K
- rehab cost roughly $40K
- resale value $210K
Without getting into a lot of details I personally wouldn't mess with increasing your primary first mortgage rate even if it only a .25% . I would leave that and get a HELOC and use against that and payback as needed.
Just my 2 cents.