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Dana McMahan
  • Flipper/Rehabber
  • Louisville, KY
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Refi frustration in Old Louisville

Dana McMahan
  • Flipper/Rehabber
  • Louisville, KY
Posted Oct 10 2019, 06:11

So four hours before we were scheduled to close out on a cash-out, lower-ate refi of our Old Louisville home Tuesday, the lender called with some questions about our third floor and now we're in limbo.

Here's the situation: our house is a three story like most others in Old Louisville, with interior and exterior access to the third floor. We run a licensed short term rental on the third floor as well as in our detached carriage house. We applied for the refi with Better.com, as they're one of few lenders who will accept Airbnb income and I explained our somewhat unique arrangement to my first point of contact, including sending her photos by way of this article about our home. The 3rd  floor Airbnb has a kitchenette with this vintage stove I had restored and put in here basically as an Instagram moment -- people almost never cook, but they like to think they will. 

Everything was fine, we were approved, signed the initial closing disclosure ... then wait! Tell us about that third floor again! I've talked with several people now, explaining the vagaries of Victorian architecture, and gone so far as to send them some 1889 blueprints of my house to explain that it's just a big house with a third floor. But apparently now I'm waiting on a dispute that's been filed to say they should make the loan even though Fannie Mae won't lend if there's an appliance on the third floor. The last person I spoke with actually asked me if I could hide the stove, which seems a little sketch.

I don't expect the dispute to work, so we're back to the drawing board, with a goal of lowering our 5.25 rate and ether cashing out an additional 100k or so of the 300k we have in paper equity, or separately doing a HELOC so we can get started on our BRRRR plan. When we went through the refi process last year for a major reno, I ran into endless roadblocks getting financed with this weird house set-up, and finally got a loan with Benchmark here locally. I didn't enjoy working with the person there, so am looking for other lender suggestions. Also, just want to share this as a cautionary tale for anyone else in my part of the city. You can bet when we go to sell that stove won't be in there -- I don't want a buyer to have *their* closing fall through last minute!

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