Question by homer simpson: Cash out refinancing for another mortgage downpayment?
I want to do a cash out refinance on my mortgage in order to get a down payment for an income property. I have plenty of equity in my current mortgage. Where do I begin?
Do I do the refinance first and hope my bid on the income property is accepted? Do I put in a bid on the house first? Is there a way to roll some things together to avoid paying closing costs on the refinance and the new property purchase?
Is this just a bad idea all together?
Answer by Noneya
The only way to do this is to do the cash out refinance first. This allows you to season the down payment for the purchase and allows the lender to accurately calculate your debt to income ratio because the new mortgage payment should be reporting by the time you apply for the purchase.
You should also know that you will need to qualify for both mortgages without including the anticipated rental income when you apply for the investment property loan.
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