Conventional mortgage from installment loan?

[Nate Downs]

Hello All,

I currently have a conventional mortgage for my personal residence and one rental property. I have another rental property with a $24,000 installment loan. I have a couple questions:

When I went to purchase a rental property my mortgage banker told me I had to use a commercial loan if it was going to be an investment property...is this correct? I got around it by saying I was planning on moving into the property as my primary residence and that seemed to work. I would like to continue to use this bank and that is obviously not going to work every time I want to purchase another rental and I don't want to fib like that either. Any insight on this situation?

My other question is I have a property with a 15 year installment loan (currently 2 years into it) with a balance of $24,000. Interest is 3.75 for the first 5 years then ballons. I bought the property over 10 years ago for $36,000 and have done a lot of work to it and also used it to fund other purchases. It was originally financed with a commercial loan. Looking at comparable properties in the area this house would appraise for around $70,000 now. Is there any way to get a conventional mortgage on this property and get some cash from it? Do I even want to do that? What would one of you pros do to maximize this situation? I would like purchase another rental and just wondering if I have a great opportunity to extract some cash to put into a new investment. It seems there is potential here and I'm not educated enough to see it clearly.