Hi! I need help with mortgage regulations in Texas and help coming up with a creative way to purchase my next deal. This is a bit complex, so bare with me...
I have been searching for deals in a specific neighborhood for two+ years and used MLS, direct mail, personal relationships, etc. and recently closed on my first property. Here's where things get complicated...
I needed a primary residence, so I purchased "Deal A" deal thinking I would live in it for a while until I found something better (properties in this neighborhood rarely come up for sale). I closed the loan about a month ago as a primary residence. Remember this was 2+ years in the making.
Then, as luck would have it, a week after closing Deal A, I got a call from a person I sent a direct mail letter to seeing if I was interested in purchasing his property. His property has two single family residences on it. One is currently leased (house 1 Deal B) and the other house is vacant (house 2 deal B) and is the ideal house I've been searching for for my primary residence - we'll call this one "Deal B". I called my mortgage company and explained the situation and they said it was no problem and they'd finance Deal B as an investment property (with the understanding we'd be living in house 2 of Deal B). This seemed like a win-win for everyone. Now, two weeks before we're supposed to close, the mortgage company is saying I need to refinance Deal A as an investment property and turn Deal B into my primary residence loan. They quoted nearly $15K in closing costs to ReFi a deal I JUST CLOSED ON (includes 7K that would go toward principal/75% LTV). They also said I would need a brand new appraisal (other isn't even a month old). This causes several issues: significantly more cash up front to close on a deal that just closed, pushes the timeline out for closing Deal B and I'm under contract to close in two weeks, makes this whole process a money-pit mess that makes it much longer for me to get a return on Deal A. I'm more inclined to let Deal A sit vacant for 6 months (total of $4800) than have to refinance it (if that's how it would work).
Questions:
-What are my options to get this done and close on Deal B? I can't let this opportunity go!
-What is the cheapest way to get Deal B and live there instead of the house from Deal A? Deal A will provide great cash flow for a SFR and is less desirable for me and my family when compared to Deal B. We want to move directly into Deal B and rent Deal A.
-Would you refinance a loan you JUST closed just because a lender is telling you that's the "only" way to do it?
-How would I handle insurance if Deal A is supposed to be primary residence but I actually live in House 2 of Deal B?
The rough numbers are: Deal A: $110K purchase price. $800 PITI & Exepnses. Will cash flow approximately $400/month. Already put 20% down + closing costs at closing a month ago. 30 year loan.
Deal B: $285K purchase price. Planning to put down 25% and have 30 year loan term. The current tenant from house 1 of Deal B pays $1000/month + all utilities and expenses (metered separately). I would assume additional PITI & expenses for house 2 of deal B and use it as my primary residence.
Please help! I am determined to make this happen but need to figure out what's best for ME and not just follow the lender's lead!
