Chula Vista, CA · Member since 2019 · 19 posts · 7 votes
My wife and I would like to buy our dream home next year as our first live-in residence (We’re renting now).
PAST- We bought our first investment home 7 months ago and we have a Hard Money Loan that I'd like to turn into a long term option in the next couple weeks.
PRESENT- We are buying our second investment home now but we have enough cash to do it without needing to pull out equity from our first investment home.
FUTURE- Next year, we would like to buy our DREAM home (3rd home, first residence) for ourselves and we’ll need all the money we can get.
OPTIONS
1. Get a 30 year fixed mortgage now and do a HELOC, Cash-Out, or Home Equity line of Credit when we're ready to buy this expensive home next year. We will have more equity at that point.
2. Transfer my Hard Money Loan into a Cash-Out Refinance now. I’ll get cash that I can save up for our dream home and save a step next year when we’re ready to buy our dream home.
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
5y
or, Option 3:
REFI the first home to get rid of that expensive HM Loan (why do you still have it)? Buy your second investment home with a mortgage (20% down) like you should be doing, then save your cash for your "dream home".
You want to leverage your investment properties because the source of funds to pay the loan comes from the tenant's rent, not your pocket. You want to pay for your own home in cash (if possible) because ALL of the money comes from your pocket.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
5y
After you refi #1, as asked, why would you keep it more than 6 months. Then buy house #2 as a primary (you won’t get rent but you’ll save current rent, count that as “personal income”) this will give you a better rate and lower downpayment as well as easier qualifying. Then after a year rent it out and buy your dream home as a primary.