From what I understand it is possible to refinance from a HML to a conventional loan easily after 6 months of having the HML.
Is it as easy I believe, or are there complications that may seem unclear or arise during the process.
Also, my partner and I are trying to figure out which method of cashing out our equity will be more cost effective for us. We have a property we are looking to purchase is 140k and needs 10k in work, and will appraise at roughly 215-225 after repairs. Once complete we are unsure if we should refi or take a heloc out. I am not aware of the advantages and disadvantages or restrictions on each.
We will use the refi or heloc money for downpayment and closing cost on our next investment.
Thanks!
How easy the loan is will depend upon what your qualifying criteria looks like.
Credit, employment history, income, assets…etc.
If you are just wanting to refinance the existing loan with no additional cash out then this would be very easy.
However, if you are looking for cash out, many lenders will not want to use the actual appraisal value to determine the ltv. They would use the purchase price. Referred to as the seasoning requirements.
The normal Fannie Mae loans do not have seasoning requirements but most investors cant qualify for these because of ltv, qualifying criteria, # of properties, etc. These same lenders that handle Fannie Mae also offer AltA loans that are great for handling what conventional loans dont offer. But the seasoning requirements are almost always 12 months. A handful are at 6 months, and just a few allow less than that.
I recommend speaking to a nationwide mortgage consultant that specializes in investment loans.
Phatman,
As was already posted your credit scores, income, and reserves will play an important part in your loan choice. The best deal I have seen recently is a no-seasoning refi cash-out up to 80% of ARV. Which means in your case you could borrow anywhere from 160-180K which would put somewhere between 10-30K in your pocket (based on your posted numbers) and you would have the property at 80% LTV. This means no MI, and a decent rate at the 80% threshhold. Hope this helps.