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Old 08-27-2011, 06:55 PM
 
3 posts, read 10,956 times
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I own a property purchased some 5 years ago for my parents that currently has a conventional residential mortgage loan on it (the loan and property is in my name). Due to the economic times, the property has been rented out. I am interested to refinance (it was an ARM that has since expired).

Should I refinance as an investment property or back to a conventional mortgage? I am still renting it out since I am not actively living in it.

What's the difference between my current "ARM-expired" conventional loan and an investment loan? I'm confused since I haven't found a lot of information online contrasting the two types.

Would conversion into an investment loan affect me should I want to purchase another home (negatively or positively)?

Any information/advice is greatly appreciated. Thanks!

Last edited by Green Irish Eyes; 08-27-2011 at 07:19 PM..
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Old 08-28-2011, 11:47 AM
Status: "October is the eighth month" (set 18 days ago)
 
Location: Just south of Denver since 1989
10,676 posts, read 28,486,584 times
Reputation: 6842
You can refinance any loan, provided you can qualify. You still have an adjustable rate mortgage, even if the low teaser rate has expired.

It's best to choose whether to refi or not based on rate and costs.
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Old 08-28-2011, 08:47 PM
 
Location: Virginia
235 posts, read 807,491 times
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Would it be more rate if the refinance is for investment mortgage
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Old 08-29-2011, 05:44 AM
 
Location: MID ATLANTIC
7,598 posts, read 17,614,249 times
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Investment interest rates are always higher than owner occupied mortgages. It's easy to understand that tenant occupied properties are no where near maintained to the same standard as an owner occupied home. If you are going to say you are going to live in this home, be prepared for some lenders to actually require you to be in the property before closing. Occupancy fraud is the number one fraud in the industry.

As for assessing if it would hurt or help you in another purchase is like asking you what color will the sky be next year on this day. We need a whole lot more information. The driving factor is going to be how the property is reported on your tax returns to fully answer that question.

Most ARMS have an introductory period. Meaning, if you have a 5/1 ARM, the payment is fixed for 5 years and then becomes a 1 year ARM. (7/1 is fixed for 7 years and then becomes a 1 year ARM) It sounds like your ARM is done with it's introductory period. You really need to find out what kind of ARM you have. Some are interest only during that introductory phase, some are option ARMs (paying less than the interest charged, resulting in a mortgage balance that increases). You also need to know what the ARM is based on. If the LIBOR or Treasury, your annual rate is probably very low........however, that can change in the blink of an eye. Refinancing an ARM today means your payment will almost certainly go up........but it won't keep changing every year.

I suspect your biggest problem, like the rest of America, is going to be the lack of equity. In that case, you're really stuck. I don't know of any lenders that are modifying a non-owner occupied mortgage.
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Old 08-30-2011, 05:40 AM
 
Location: Heart of Dixie
1,298 posts, read 1,849,515 times
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I'm not sure on the contrast, but I can tell you loans for investments, such as cashout, even with a high credit score, reserves and low debt ratio, you will have to jump thru many hoops, it's aggravating, underwriting and conditionals are a bummer. Good luck on whatever road you choose.
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Old 08-30-2011, 07:24 AM
 
4,542 posts, read 11,542,319 times
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Quote:
Originally Posted by darkblue View Post
Would it be more rate if the refinance is for investment mortgage
Yep, either higher rate or higher costs or something in the middle. However, you don't have the option of choosing between the rental property mortgage(non owner occupied) or the non rental property (owner occupied) mortgage. You don't live in the property and rent it out, therefore your only option would be the more expensive non owner occupied refinance. To go the other way would be mortgage fraud.
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Old 08-30-2011, 08:57 AM
 
Location: Phoenix, AZ > Raleigh, NC
14,297 posts, read 17,491,099 times
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Everybody has already said what I would have said. But one more thing: did you tell your homeowners insurance company this was now a rental property? I'll bet you "forgot". That's NOT a risk you should take.
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Old 08-31-2011, 08:15 PM
 
3 posts, read 10,956 times
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Thanks all. This is very enlightening. I'm currently pursuing a refinance as an investment property. Actually, the insurance has been reclassified as a rental property for several years now so that part is good.
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