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mortgage question on rental property

1,629 Views | 11 Replies | Last: 2 yr ago by BoDog
BoDog
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AG
I am sure this has been discussed before but was wondering if some of the resident mortgage guys can answer this question for me....

I currently have a rental prop worth $400k. Owe $275k.

About to close on a second property in early September for $340k.

My question is can I somehow use the equity in the first property to use as collateral in lieu of a down payment? Not to complicate things but in doing so I would also like to refi the first property to a lower rate. Currently at 5.5%.

Given the situation what are my options and maybe more importantly the path to least resistance?

Thanks in advance!
SteveBott
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AG
To access the equity you need to refinance the property to 75% of the value and take that equity to close on the new home. My contact info is in my profile.

SB
BoDog
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AG
Thanks Steve. I will plan on reaching out on Friday when I get back to town. What rates are you seeing for said properties?
SteveBott
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AG
I haven't priced this loan in a couple of weeks. Low 3's but several variables to work through.
NoahAg
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I learned through this board that you can't do a HELOC on a rental property but you can on your primary. Maybe that's an option?
jja79
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AG
Noah is correct. If you have sufficient equity in your existing home you can leverage that without closing costs to fund the next down payment. If you take a cash out loan on the existing rental property you'll pay those costs.
Jay@AgsReward.com
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Sponsor
AG
We have a HELOC product on a rental property. It does have to be in first lien position however.
BoDog
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AG
Thanks, JAy. Can you clarify what you mean by first lien position as it pertains to this scenario...?
SteveBott
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AG
The first lien position means if you default it is first in line to be paid in liquidation. Your current mortgage lender will not accept that. And they would have to approve moving to a second or subordinate position.

His product would work fine if the house is lien free
SquanchyAg
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Reckon I shouldn't give advice. Do what you want.
BoDog
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AG
hmmm. ok squanchy please enlighten me on what I should do .....
itsyourboypookie
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BoDog said:

hmmm. ok squanchy please enlighten me on what I should do .....


Buy a trailer park for 340k and quadruple your cashflow
BoDog
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AG
Yep that sounds easy and low maintenance.
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