Forgotten Your Password?

Need to Register?

Question Icon

refinance primary home to pay off rental property

by sherea_544_332 from San Diego, California. Feb 15th 2013 Reply


Bruce Conn (BruceConn)
#202 ranked lender in California - 17 contributions

There are a number of moving parts to your situation: What are the current rates paid on both properties; for how long do you plan to hold each property (even "don't know" has its own strategy); loan-to-value is important because rental refinance rates are very good when the equity is 40% or more;what is your cash flow tolerance for payments;what is the rental's interest expenses relative to rental income; what is your tax bracket; and the general issues of Income and Asset Qualifying.Absent any one of the components above, you will not get the best possible scenario for this undertaking Also, there are a few other angles from which to view your situation but they fall under the purview of your accountant. As is the case with quick responses like this, more questions are raised than answered. If you would like to talk about it more you may reach me directly at 800-696-0696.Bruce ConnCALIFORNIA Equity & Loan"Quickly, professionally, at the best terms available."

Feb 15th 2013
Call: (800) 696-0696       Send a Message    Website
0
0
Crestico Funding (CresticoFunding)
#16 ranked lender in California - 310 contributions

Hello Sherea,It is easily achievable assuming you have enough equity in your primary resident. if you need more information about the process please feel free to contact Houtan Hormozian @ 310-933-4748 or via email houtan.hormozian@crestico.com

Feb 15th 2013
2
0
William J Acres (William_Acres)
#1 ranked lender in Arizona - 4,609 contributions

Yep... no problem.. The best advice I can give you is to contact a LOCAL mortgage broker and apply with them. Do not use the local "Big" bank, or one of those 50 states internet lenders or nationwide lenders...By applying with your LOCAL Broker, you have an advantage because he's familiar with local customs and works with numerous lenders, seeking out the best loan terms for your particular scenario. Because he has lower overhead, he can offer you lower rates and lower fees than most of the larger lenders.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Feb 16th 2013
1
0
Benjamin Bote MLO-310327 (Benjamin)
#41 ranked lender in Oregon - 19 contributions

What is your goal? What are you wanting to achieve?

Feb 15th 2013
0
0
Benjamin Bote MLO-310327 (Benjamin)
#41 ranked lender in Oregon - 19 contributions

I recomend consulting your CPA first. There might be higher benefit deducting the interest on Sch E.

Feb 15th 2013
0
0
Larry Gray (lgray_312_247)
#9 ranked lender in California - 273 contributions

I approach the prospect of refinancing one's primary property to pay off a rental property with a prejudiceof putting the primary property first for the vast majority of prospective borrowers.You really should have well thought out reasons for using this equity to pay off a rental property. Perhaps you findat today's rates your monthly payment on the primary property is excellent and you like the cash flow from the rentalproperty after paying it off. At least you are down to paying only one mortgage (assuming no other rental properties.)It really is all math, if you do not mind taking the cash out of your primary property to pay a rental property off.What works for you is the question and it would be good to view the math in refinancing your primary property solely for a monthly savings, as well as the rental. It is late and I felt like answering a question though perhaps answered well already!I would be happy to go over the scenarios to see what makes sense. Please do call!

Feb 15th 2013
0
0
Brian Allen (ballen)
#47 ranked lender in Maryland - 104 contributions

I would not do it, if the property is rented you have OPM working and additional tax deductions this property is an investment your residence is not. If you need to refinance to get a better rate by all means, taking equity from your residence for this purpose would not be sound.

Feb 16th 2013
0
0
Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 2,347 contributions

You question isn't detailed enough... You can refinance the primary to pay off a rental... But you may want to think it further. Now you are adding debt on the primary home. Not really a great idea if something were to go wrong down the line. For example, if you run into financial issues, letting the rental property be foreclosed on is sure better than having the house you live in foreclosed on.

Feb 16th 2013
0
0

Hi guys,I wasn't able to sign in and reply earlier but let me start by saying thank you for your responses, let me give you alittle more information.We owe 45K on our rental property that was just appraised at 260K. our payment is $950 a month and we are recieving $1600 a month rent... We were looking to pull cash out to repay a 40K private loan on a recently purchased vacation home and cash out to fix it up while also having more interest write off for our taxes also. Upon talking with a lender, he suggested with our tight qualifying ratio and getting a better rate to take the 170K we owe on our primary home, the 45K to pay off rental and pull out the 100K all rolled into lower interest rate and eliminating the rental mortgage all together, saving us $950 per month. It was worded as: You will still owe $315K why does it matter which home its being paid on why not get the better rate, qualify easier and have the same payment we do now on our primary home and elimate the $950 a month payment.Checked with a couple CPA's who says all mortgage interest is a write off so "should be a wash", while another said "it all depends on your tax situation".Phoning one more CPA later on for a third opion, because our old thought was only the interest on the rental property was a write off, yet, we do write off all interest paid in the end and our 45K we owe now is paying mostly principal and give us very little interest write off...Hope I'm explaining this correctly, any help on this is great, there seems to be some grey areas...Thanks so much,Shereamour

Feb 16th 2013
0
0
Brian Allen (ballen)
#47 ranked lender in Maryland - 104 contributions

Sherea, if I read correctly isn't it just advantegeous to cash out the investment property where you have a $1600 a month rental income using 70% LTV using those numbers you would be left with approcimatel $90k to due the repairs and what ever, of course the loan be dependent upon the required debt ratios.

Feb 16th 2013
0
0
Brian McFedries (bmcfed)
#11 ranked lender in California - 419 contributions

Based on the scenario you submitted it makes sense. Owing 315K is owing 315K regardless of how it is spread out. Lower interest rates on the primary residence. www.helphousing.net also located in San Diego

Feb 16th 2013
0
0

Ballen, if we cash out the investment property we will have 2 mortgages instead of one, and the new one with cash out higher interest rate since an investment property.BMCFED thanks, this is what we were told "Owing 315K is owing 315K regardless of how it is spread out. Lower interest rates on the primary residence" the plus... just want to make sure no tax ramifications of any kind for tax writeoffs...

Feb 16th 2013
0
0
Phil Dumouchel (PhilDu)
#1 ranked lender in South Carolina - 1,376 contributions

Seems like you have looked at all the options and gotten some good advice. Go ahead and do it, if you have some other high cost debts you might want to pay those off as well but I recommend using your improved cash flow to make extra principal payments on the new mortgage as often as possible, even if it just an extra 50-100 a month.

Feb 16th 2013
0
0

Didn't find the answer you wanted? Ask one of your own.

Get an answer
Subscribe to our news feed.