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Old 07-04-2010, 09:04 AM
 
10 posts, read 26,931 times
Reputation: 13

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Need advice please.

I am in the process of buying a new house and we are short of $25000 for 20% down payment/closing cost etc.

Current house has very good equity in it and I had financed 10 years ago so paying higher interest rate.

I was thinking if I can refinance existing house with lower rates, get $25000 payout and my mortage payments will probably go up by maybe $50 or remain the same.

If I go this route, will I still be able to get mortgage for my new house? or will the bank turn me down because I did refinance on my existing property.

I am trying to sell existing property but in the current economy chances are that is not going to happen and I will need to rent it out which should not be an issue(or so I think)
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Old 07-04-2010, 11:45 AM
 
Location: Laguna Niguel, CA
768 posts, read 4,140,585 times
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With FHA financing you would just need 3.5% down on the new purchase (assuming it's owner occupied). If your new loan amount would be above the FHA loan limit you could do a cash out refinance on your existing home but it'd be treated as a non-owner occupied home where the rates would be a bit higher and the limit on the cash out refinance is limited to 75% of the home's value. If you can still qualify for both mortgage payments that is an option though, the bank for the purchase wouldn't turn you down solely on the fact that you just refinanced your other home.
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Old 07-06-2010, 10:15 AM
 
4,987 posts, read 12,699,932 times
Reputation: 3796
Quote:
Originally Posted by neolinux123 View Post
Need advice please.

I am in the process of buying a new house and we are short of $25000 for 20% down payment/closing cost etc.

Current house has very good equity in it and I had financed 10 years ago so paying higher interest rate.

I was thinking if I can refinance existing house with lower rates, get $25000 payout and my mortage payments will probably go up by maybe $50 or remain the same.

If I go this route, will I still be able to get mortgage for my new house? or will the bank turn me down because I did refinance on my existing property.

I am trying to sell existing property but in the current economy chances are that is not going to happen and I will need to rent it out which should not be an issue(or so I think)
If your house is listed for sale, you won't be able to refi. However, you may find someone to give you a bridge loan (tap the equity in your current home) for the $25k.
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Old 07-06-2010, 11:27 AM
 
Location: Plano, Texas
1,675 posts, read 6,655,061 times
Reputation: 694
I agree with Tim. With the current house listed for sale you will not be able to refinance.
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Old 07-06-2010, 04:29 PM
 
Location: New York
2,251 posts, read 4,540,926 times
Reputation: 1611
Quote:
Originally Posted by VictorBurek View Post
I agree with Tim. With the current house listed for sale you will not be able to refinance.
Dito - you will not be able to do that if your current house is for sale. Keeping your house and renting at out is a better decision.

Question to your self - the secret of wealthy people, their success is measured on multiple sources of income. Having rental income, can be a good source of income later in the future.

I wrote loans for almost a decade, worked with many home owners that did what you are looking to do. Pulling cash out of your existing property.

By refinancing the home you are living in, it is considered your primary property. You will qualify for a better interest rate with you living there. I would wait a few years as the value returns, before considering selling it. Better yet keeping it.

Another suggestion - too minimize closing costs, do a stream-line refi with your existing lender.

Example - my wife and I refinanced last year, consolidating a 2nd mortgage and our bills, going to a broker saying he could get us a fixed rate of 4.5%. We get to closing - the rate was 4.5%, but there was also $12,000 in fees. I said B.S. and walked out!!!!! Called up my existing lender - got 4.5%, total fees $956 (including appraisal).


Good luck

.
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Old 07-06-2010, 09:47 PM
 
10 posts, read 26,931 times
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Thank you all for your helpful suggestions.

I am giving some thought to keep existing house and renting it out, was always our dream to keep both houses and get rental income.
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