I would like to refinance my home from the 6.75% 30-year-loan that I have on it to the new, shiny, 4% or so 15-year loans. But my lender is saying they don’t refinance when there is a second. They will only refinance the first mortgage.
The second is with the same lender–Chase Bank.
Have any of you had success recently refinancing? We have good credit scores, in the mid 700’s, tax returns showing all the rental income, etc. It’s such a huge paper chore to get a new loan that I don’t know if it is worth it to even try.
Home prices here are stagnant, no real appreciation, so the LTV (loan to value) could be a problem. But I’d rather be paying 4 than 6. Any tips? Any of you try the Obama refinancing program, or is that only if you are in foreclosure?
Furnishedowner
Furnished,
You just need to subordinate your second lien during the refinance. I would totally recommend refinancing as many investment properties as you can.
I am working on an invest property cash-out and their rate is 4.875% on a 30 year cash-out.
That is flat out insane. A year ago 4.875% was good for an owner occupied property.
The problem most of my customers are having is that they own more than 4 properties and I can’t help them.
christopherw,
Yes,we have about 9 or 10 loans, most blanket loans with a local bank. But several old loans that were Countrywide’s when they has those great 10% down investment loans. I’m not even thinking of re-financing the rentals; it would be an impossible task I imagine.
I know you can subordinate a second, but I believe Chase told me they wouldn’t lend on a new first if there was a second. I will have to try them again.
Is there anyone doing refi’s for owners who have more than 4 loans? Anyone doing owner-occuped refi’s and allowing subordination of a heloc?
Thanks,
Furnishedowner
I would like to know the state that you and the properties reside in. On the owner occupied loan I would recomend an FHA loan, although they just changed their guidelines to now say that if you didnt take out the 2nd at the time of purchase, then your held to the cash out LTV restictions, which is 85%. FHA has no combined loan to value requirements, however the various lender overlays tend to cap CLTV out at 100% so subordinate the 2nd no problem so long as you dont go over 100% LTV.
As to the 10 loan limits, and who can do financing for someone with that many financed properties…I happen to know of a few investors that can. One limitation that will come up past the 10 financed property rule though, is that my bank and each of our investors have limits of number of financed properties to the same borrower, so even though we can do those loans, they would have to spread them all out over 3-4 investors so not all loans were made by the same lender.
BUT HECK YES, I KNOW WHO CAN DO IT!!! I SAY DO IT WHILE YOU HAVE THE CHANCE AT THESE GREAT RATES!!!
rastusracing and christopher w,
Your answers are exactly why I like this site so much. I had never even conceived the idea that I could refinance INVESTMENT property in this market. Very inspiring! I am jazzed! Could be huge savings here.
Looking in my mortgage binder I see a typical property: Sombre Units, bought furnished for $120,000 Jan. 2006 with $12,000 down. Current loan $101,800 at 6.75%, 30 year. Principal & interest $947/month, PMI $77.
Property is a 3 bedroom, 2 bath standard suburban looking house with 2-car garage. But there is an attached studio mother-in-law unit, which is why I bought it. It was financed like a SFR with a guest house, which is commonly done here. Duplex loans, I was told, fall into another category. Keep 'em single family in order to get financing.
I just calculated a refi at 4.75%, 30 year, could drop the P & I payment to $531/month! That number is so low that it seems bogus! I should be able to get rid of the PMI on a re-fi.
Okay, I am on board with this. Can I refinance with a nationwide lender, or do I have to go local in this market? Can I refinance multiple loans, and my residence at the same time? Do I have to do them one by one? I would like any 30-year loans to go to 15. Some of the loans are short term, 6 years left, so it wouldn’t make sense to refi those, right?
The property is in New Mexico. The current rent on the house is $2100/month, the studio $1050. We pay all utilities.
Furnishedowner
I think there were some real famous words that went something like this.
“SEEK AND YE SHALL FIND” Well in this case it can be done.
Sometimes when you think you cant, maybe just maybe, you can.
Kevin
rastusracing,
Thanks for the PM (personal email message) about possible financing. If I can refinance it will make my month!
Chase Bank killed entirely the idea that I could refinance my personal residence to a lower rate with them. They could subordinate the also Chase second, but they could not refinance the first because “The computer program rejects you as being outside of the lending parameters. Perhaps you have too many loans, I don’t know, but the program rejects you. There is nothing we can do. Good-bye.”
Thanks a lot, Chase. Now maybe you can quit sending me those “REFINANCE NOW!” letters?
I was also told, “The Big Three have very restrictive lending programs and you are better off going to a mortgage broker.” I am guessing that the “Big Three” are Chase, Bank of America, and…?
Furnishedowner
Furnished
As long as u are refinancing your primary it does not matter how many rental units you have.
Forget the rental properties as that will be an absolute nightmare. Your LTV is very limited and you will need a huge amount of reserves. You will end up spending a ton of money on apprsisals and appraisal reviews with no guarantee the loans will close. Trust me on this. Also forget about FHA unless absolutely necessary. The 2.25% upfront MIP hit is ridiculous. I would suggest asking around to people that you know for a good referral for a local guy. It makes it a lot less stressful in the transaction when you can just walk into someones office when they are not answering your phone calls or emails.
christopher,
Thanks, I appreciate the feedback. My son-in-law just refinanced his only SFR rental house at 4.375% or so. He used an out-of-state mortgage broker associated with his restaurant business. He wasn’t real forthcoming on whom, so it is not a lead I can use.
I am also concerned that my residence has a detached “guest house” which was once a geologist’s office. It is now my real estate rental office. It is a home business use in a non-commercial area.
I had wanted to go through Chase as they advertised refinances for current customers in good standing, and without major appraisals.
You mortgage lenders–how would my office building use affect my attempted home appraisal? Has anyone encountered this before?
Furnishedowner
Does the office have a sign and a parking lot, etc? Or is just a detached building on the property?
Hi
Weighing in on your primary. If it is detached and set up generally as an additional SFR on the same parcel as the primary with its own power meter, then its generally considered a duplex or 2 unit. Its still residential because the definition of residential property is 1-4 units. You can still refinance it without much changes to the rate versus a SFR.
As for Christophers comment on FHA having up front MI at 2.25%, in this case you choose the lesser of two evils, that being mortgage insurance and how each is applied as it relates to FHA and Conventional or Fannie Mae/Freddie Mac loans. You will have to have MI on a conventional loan if you exceed 80% LTV, or at least Lender Paid MI. On an FHA loan, yes its true that they recently raised the up front MI multiplier from 1.75% to 2.25%, but if you are doing a 15 year mortgage and you dont exceed 89.99% loan to value, then you dont have any monthly MI.
The best way to look at it is that each loan is unique, it best to look at all your loan options and crunch the numbers to see how it all will work out.
Oh and one other comment, there are specific loan programs available through Fannie / Freddie that will allow you to exceed 10 owned and financed properties, so as to it not being worth your while to refinance rentals…I totally disagree with that…it is very much worth your while.
Rastus,
The fact that furnished has a first AND a second says to me that the current loan was set up to AVOID PMI. So really there is not the lesser of two evils there is only one evil PMI/MIP. The new loan/loans need to be structured in such a way that the borrower avoids either monthly OR upfront MIP. In addition to that what needs to happen is furnished needs to find out what the property is worth and then decide. If the property is not going to be less than 80% LTV then you have to look at monthly PMI vs. Upfront MIP.
For example if the monthly PMI is $50 per month and the upfront MIP is $2500 then it will take at least 50 months before the conventional loan with PMI becomes the more costly loan. If the LTV is 84% it will most likely take way less than 50 months for the PMI to be removed from the loan especially on a 15 year Note. Plus monthly PMI is tax deductible until your income increases to over 120K annually. Upfront MIP has to be annualized over 30 years.
Christopher and Kevin,
The detached office building is metered on the main house. It does have a 3-car lot in front of it, and a Cowboy head metal sign, nothing written. It does not have a kitchen, only frig, washer, dryer, no sink or stove.
Inside it definitely looks like an office, and Farmer’s pulled their insurance when they came out to look at my hail-damaged roofs last year. There are white boards, computers, telephones, all the usual office stuff. Plus us running around like chickens answering the phones.
We put 20% down but later took out the HELOC. I am guessing that there is at least 10% equity in the place. I only want to do a refinance if it is possible, not some long shot. I don’t mind FHA without the MI but will they go on a home office?
Furnishedowner
As I said before, the best way to look at it, is to crunch the numbers to see which loan option makes the most financial sense.
As a loan officer, we know that if we give the customer the best deal that we can they typically will be very happy and return many times for their mortgage needs. That being said, virtually all loan officers attempt to avoid mortgage insurance if at all possible. By doing so this is usually the least expensive way of getting the loan done for the customer.
However there are times that you cant avoid mortgage insurance, during these times it more important than ever to crunch the numbers, to determine which route make the most financial sense considering the customers goals and needs.
Furnished
It could go either way with that out building on the property. You might call a local appraiser and ask them what they think. The commercial use of that building may or may not be a problem. Is it all on one tax parcel?
Yes, all on one parcel. I am guessing that it was once a guest house as it has a bathroom but has never had a kitchen.
Furnishedowner
Talking to an appraiser in this instance might help, but in the end really wont be the final word on it other than the appraiser can give you an idea of how they would classify the property. Meaning a SFR with out building or mixed use.
The real issue is how willl the individual lender view and classify the property. All lenders know these days that yes the big guys, being Fannie / Freddie / FHA / VA / USDA all make the guidelines for the majority of the loans that are available in the markets these days, but it’s the actual lender’s credit overlays that dictate the final storys almost regardless of what the bug guys guidelines say that can be done.
Only one way to find out and that is take the description from lender to lender to get their take.
How long have you had your second mortgage? If it was used to purchase the home, or if you’ve had it for–I believe–at least 1 year then you should be able to go FHA and roll the 2 together in a rate/term refi.
When you refinance your mortgage you get a second loan of about the same size, but refinancing rates are usually much smaller and therefore more beneficial to you. Thus, refinancing a mortgage can really give you great savings.most owners will be looking to refinance their existing mortgages. There are several things to consider when you do this.