All Forum Posts by: Debra A.

This is tough because if he has the funds, then he should be able to withdraw monthly with ease. I would make sure I have a very solid lease written that protects yourself as much as you possibly legally can. Or, just get a normal tenant with a background, credit check, and jobs.

Personally, I wouldn't want to be in an FHA loan to house-hack. Yes, your interest rate will be lower, but the Mortgage Insurance Premium (not PMI as many people often call it) is not only a burden, but a huge waste of money (basically paying the FHA's bills). When you factor in the cost of the MI premium at initial closing when you purchase, plus the closing costs you'll have to roll in again to refi out of it (or pay out of pocket), I think it's more cost effective to go conventional. If you're in a conventional loan and you put less than 10% down, if your house gains value in a couple years and you bring it to that 20% equity threshold or better, all you do is get an appraisal and knock off your PMI....can't do that with an FHA loan. I guess ultimately you'd have to crunch the numbers and compare, but in my head that's what makes sense.

/\/\/\/\ THIS right here!  Cars are nothing but a money pit as soon as you drive it off the lot. Dumped my brand new lease with all the gadgets two years ago for a well maintained, beautiful 2000 Jeep Cherokee. No payment, and I cut my insurance premium nearly in half! And, I LOVE my cherokee :)  

/\/\/\/\ THIS right here!  Cars are nothing but a money pit as soon as you drive it off the lot. Dumped my brand new lease with all the gadgets two years ago for a well maintained, beautiful 2000 Jeep Cherokee. No payment, and I cut my insurance premium nearly in half! And, I LOVE my cherokee :)  

Are there leases in place, and if so, how long remains on them?

I know of loan programs designed specifically for investors that can definitely get you the cash you are looking for. Would need more details for sure though; how much cash you need, how much the property is worth, etc etc. 

If you have enough reserves in the bank to do so, I would try to just see if the bank has a mortgage product that doesn't have to look at your other income outside of what the property you're interested in purchasing produces. We call it a "Debt Coverage Ratio" at my bank. We basically just look at the expenses of the property and then look at the rent that it will produce. Ask the UW about that.

If that is a true fixed rate....why not just pull the entire amount out and pay off the entire investment property? 

Your other thing to evaluate is, taxes and pre-paids usually are the bulk of the "cost" financed into a refi. Closing costs for a refinance are always the same: origination charge if the bank has one, title, appraisal if one is required (usually paid out of pocket by borrower), any points for the rate if it's below par, pre-paids such as taxes and insurance for your escrow account. Like I said usually the charge for the rate and your escrow are going to be the biggest costs rolled into the loan. Depending on where you live of course.

Let's compare:

1. If you cash out enough to pay off entire investment property your balance is estimated $360,000 @ 3.4%.

Estimated P&I = $1600/MO FIXED! No increases

2. Right now your current P&I on the $240k balance = $1112/month (estimated) + $443/month P&I for the investment = $1555/month but could continue to go up once it enters that adjustable phase, so $1555/month could = $1655/month in 3 years, $1700/month in 4 years, etc etc. 

3. Just simply refi the investment property...estimated balance with all costs rolled in $110k = $590/month P&I 

= $1702/MONTH TOTAL between two mortgages (-$100 in cash-flow compared to option #1) (5% rate for investment property) 

@Sean C. I agree with both of the previous statements. All comes down to the lender and the loan officer. I know of a "SmartSeries" program for example that allows investors 90% LTV on purchases of 1-4 unit residential properties with a loan of up to $1.5 million if it's a PR. That same program also allows 85% Cash Out on PR 1-4 unit properties. I'm assuming your idea is that after doing the rehab, the property value will go up, thus allowing you to tap into the equity? My question to you is, what type of rehabbing are you considering? Are we talking major structural or cosmetic stuff? Or are we just talking updating things to make a place more modern? Also, there is no ownership seasoning for the cash out as long as the original borrower is the one pursuing the cash out transaction.

What type of property are you looking for?