Question by J.: If I just refinanced my home mortgage, can I finance a new investment property soon after?
I just refinanced my home last month and got a much lower rate and payment. Of course, this means my mortgage was paid off and a new loan was initiated. Does this affect my credit in a way that would hamper me being approved for a mortgage on a new investment property?
Answer by teebone35
Yes it could. Basically the bank is going to review your credit with the house that you just bought taken into consideration. The banks may ask you for a bigger % as a down payment because it is considered an investment property. If you have everything lined up and your debt to income ratio is where it needs to be then you should be fine in buying another home. If you dont have the $ for your down payment or if your past your ratio then the bank will see that your too much of a risk to lend for a second home.
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No since the investment property would be a commercial loan at a much higher rate. If you have enough income to cover the payment should be no problem.
Just having refinanced your residence should not be a negative. It would be impossible to say what might keep you from being approved for the investment property purchase, but it has gotten more difficult to qualify.
If your ratios are improved, I would think that would help you. Count on needing 25% down payment. Do you have a history of managing rental property? If not, lenders are going to count the payment on the new property in your ratios without any credit for the rental income on the new property. The more liquid assets you have the better and excellent credit is pretty much a must. Count on the fees being much higher as Freddie and Fannie charge like 1.75% in delivery fees on rental property and then there could be additional fees for multi-unit properties or based on your credit scores and the loan to value.
The refi on your primary would be a cake walk by comparison.