Refi on home with a personal loan

[Jon Mason]

I have a potentially stupid question, but here goes. We purchased a property as a rental for $120K. $85K is a conventional mortgage and the other $35K is a loan from a family member. We're almost done rehabbing the property and I believe the ARV will be somewhere from $150K - $160K. I want to refinance and pay off my family member as soon as possible after we get the house rented. I know you can only refinance for 75% - 80% LTV in most cases. My question is whether that LTV is calculated including ALL the loans used to buy the property. So does it include the loan from my family member, or is it just the mortgage itself? The loan from my family member isn't secured by the property or anything, it's just a personal loan. This would mean the difference between being able to refi and pay my family member back in full or nearly in full, or having to hold the loan and pay it off over time.

[Justin Kane]

Hey Jon great asking questions on here, remember the only STUPID questions are the ones never asked..

The cash out refi programs are leveraging 70-75% of the appraised value so when you are finished with rehab

you will open it back up with title to have the property refinanced with a lender at which time you will pay between 400-700 dollars for a 3rd party non affiliated appraisal company to appraise your property (always run tight comps, if the house is brick and 2 story then find other houses that are the same in the same area that have sold within 6 months if you dont have access to good comps ask 3 different realtors to run CMAs on your property and get the avg and multiply that average by 90%)

once your property is appraised you will go to close with the adjusted amount from lender to meet the qualifying coverage

for instance

you are ALL IN for 120k (also include all carry and closing costs) and you find a lender that will cash out refinance (or not cash out different states have different % lending stipulations) at 75% LTV

your property gets APPRAISED at 150k that means the lender will lend you 75% of that number which is 113k

so you will NEED to to come out of pocket to finance the difference of 113k and 120k plus closing costs in order

to keep the property. 

Hope this helps my fingers hurt :( lol jk good job keep asking questions!