When and how to Refinance a house hack?

Question

Hi BP,

I'm in the process of house hacking and renovating a multifamily property, and I have a question regarding when and how to refinance. There's a couple things I'd like to accomplish with the refinance, which I'll list here:

1. Cash out. There's not a ton of money in (I bought with FHA) but the property has appreciated and I've added value with renovations.

2. Get rid of PMI

3. Refinance into an LLC after I move out.

So as I'm currently living in the property, I understand that I could potentially get a higher percentage loan (80-95%), than if I moved out and it was a pure investment property (75%). This is what is tripping me up. Ideally I would refinance while still living in it so I can take out 80-95%. But then if I move out shortly after, will I be able to refinance again into an LLC?

Is there something I'm missing here? Any advice would be greatly appreciated!

Jaysen Medhurst · Answer

@Josephine Breign, where do you think your LTV sits? Do you have 20% equity after the appreciation and value add? I ask because you'll probably still have PMI, if you're not yet at 20%. That will drop, if you refi out of a FHA product.

What do you mean by "refinance into a LLC?"

• Move title into a LLC? What is your objective? Unless you have significant other assets to protect, the juice probably isn't worth the squeeze for just one property.
• Hold the mortgage in a LLC? Highly, highly unlikely you will be able to do this. You will almost certainly be required to personally guarantee the loan. You could consider a commercial loan, but considering the less favorable terms, I doubt it's worth it. Again what's the objective here?