Question by Hokie: In Texas, can you refinance a mortgage if changing from a primary residence to a rental property?
***More specifically, can you refinance even if you have little or no equity in the home?***
We currently live in the house, but are moving out of town next month, but are trying to sell/rent the house. So my question is specifically about rental property, and if this refinance is allowed in the State of Texas. Thanks for your help!
Answer by Synique
It really depends on the lender.
And yes, you can refi if you have little equity in the home – again, the policies will vary from lender to lender.
Know better? Leave your own answer in the comments!
When you sign your loan documents one of the forms will be a Statement of Occupancy specifying that you intend to occupy the property as your primary residence. If you sign that form and do not occupy the property within 30 days youare commiting loan fraud the lender can accelerate the loan and foreclose.
Your alternative is to refinance the loan as a non-owner occupied property loan. The rate may be a bit higher as may the costs of the loan and the loan to value may be more restrictive but you can probably find the financing. Since you may be able to write off the interest you pay and some of the costs of refinancing on a Schedule E, it may still be worthwhile.
Sure! Just note that if the property is not owner occupied, you will probably be subject to a lower loan-to-value i.e. usually 75% LTV for investment real estate. Also, you can refinance the rate and term so long as the original note allows for it. Not all refi’s have to be for cash out…….