Buying A Home
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Thoughts - Refi on current home, Effect on New Mortgage
We are going to rent out our current home next Spring. We have a place that we will close on at the end of next March.
We would like to refinance our current house because our current rate is insanely high. Do you think it will hurt the new house mortgage in any way if we refi now? Does the fact that the current house will be an investment property (come next April) change anything?
Both of our credit is great. We are financially able to do both the refi (with closing costs) and the new mortgage downpayment and closing costs.
Re: Thoughts - Refi on current home, Effect on New Mortgage
I would be wary only because your credit score will likely drop after refinancing. Currently your loan balance is lower than your original loan balance on your credit report because you've been making payments for several years. When you refi, your loan balance goes back up to 100% of the total loan (because it's a new loan and you haven't made any payments). Your score is partially made up of how much difference there is between the current balances and current available credit. That could mean your next mortgage on the new house will be using a lower credit score and possibly not get you the best rate if you know what I mean. My score dropped quite a bit during the mortgage process/shortly after closing. I can't remember the numbers but we refinanced DH's truck shortly after and it was considerably different and I got a higher than the best rate on the truck
The call provision that the pp mentioned, I hear that all the time on here but have never actually been told about that in any of my mortgage documents. You might just want to mention it to your mortgage processor to double check.
As long as this is not going to be refinanced into an FHA loan, you should be fine with the occupancy. However, the underwriter may want this loan structured as an investment property, which is going to limit your LTV, and your rate is going to be a bit higher than it would for a primary residence. You will also have to furnish assets for reserves on the total PITI for this and your primary residence.
The u/w may not catch that you are under contract with another property, but they generally do ask for a letter of explanation for any credit inquiries, and might catch earnest money checks on any bank statements you furnish.
Thanks. We've checked into if there will be an issue once we get the new mortgage. There isn't.
We aren't getting an FHA, and our LO is not looking to structure this as an investment loan right now, since we're still living in it as our primary residence.
Thanks for the input! DH signed the paperwork yesterday, so we're on our way to a Refi