How can I be certain I can refinance ?

Question

Hello BP members, I have a quick question:  I'm looking to purchase a house hack property by the end of 2025, my concern is after getting the property and rehabbing it.  Once its done, how can I ensure that I can refi into a 30 year mortgage.  Won't my credit take a hit ? what about D.T.I. ratio with another mortgage being added to my credit ?

Brittany Minocchi · Answer

Hey Erwin!

Are you planning to do an FHA rehab loan? Will the property need rehab in order to be livable, or do you just mean cosmetics when you say rehab? FHA appraisals are on the strict side, so depending on the condition of the property, a "regular" (non-rehab) FHA loan may not be feasible. FHA loans are 30-year mortgages....it sounds like you may be thinking you need a fix and flip/fix and hold type bridge loan and then plan to refinance into a longer-term loan, but those types of bridge loans are for investment properties, not owner occupied.

You will need to get your credit pulled, but the affect the pull has on your credit score should be minimal. It tends to have more of an impact for folks who have scores on the lower side, but even if you do see a drop, it should recover within a few months. I wouldn't go applying for auto loans, credit cards, personal loans, etc. while you're applying for a mortgage - THAT will drop your scores. DTI will be a factor whenever you're applying for traditional financing, so your income will need to support any debts you take on. (I keep saying traditional financing because there are investor loans that DON'T look at DTI, but you can't use those loans for properties you are occupying).

Also worth noting that if you want to refinance and pull cash based on the appraised value, you'll need to wait until you've owned the property for at least 12 months for conventional financing.

Christine Mulkins · Answer

Good that you're thinking ahead. Talk to several lenders now about your situation and plan. They should be able to tell you if they can lend to you when it's time to refi.

Erwin McClain · Answer

FHA

David Cherkowsky · Answer

How will you be financing it when you initially purchase it?