How to refi out of investment loan and into second home loan

[Betsy Bishop]

When we financed our first STR in Nov. '22. we used an investment loan bc our DTI was too close to qualify for the second home loan. What kind of options do we have in order to refi into a better rate? Will we need to prove the income for a year before we can even think of a refi? Thanks! Betsy

[Andrew Postell]

@Betsy Bishop Hmmm, I might have to make some assumptions here....and they might be pretty big assumptions so bear with me.

When you purchase an investment property you get to use income to help you qualify.

When you purchase a second home you don't get to use income to help you qualify.

When you purchase a 2nd home, no income can be used to help you qualify.

When you refinance a 2nd home, no income can be used to help you qualify.

So if you didn't qualify then, you probably won't qualify now. That is, unless your lender doesn't use a flexible enough DTI as other lenders do. I'm guessing that they didn't tell you these rules...because they didn't know these rules. And that's where my assumptions are - what was your lenders DTI and that they didn't know any of these rules.

Hope that makes sense how I described it but feel free to post more if you have other questions.