Author Topic: Refinance after HELOC/Inspection  (Read 1014 times)

ahawkchick

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Refinance after HELOC/Inspection
« on: May 03, 2015, 12:59:07 PM »
Hello,
I started reading MMM earlier this year and I'm now on my way to being Mustachian.  We applied and got a HELOC for around 62,000.  We have been looking for a single family home to buy with the money, fix it up and then rent it out.  We were the winning bidders on a bank owned as-is foreclosure this past Friday!  Cost after fees were around 45,000.  We are very excited, but very new to the entire thing.  (I've read some books, etc., but no real life experience yet).  I would like to refinance to a more traditional mortgage to get our HELOC funds back.  The house needs a fair amount of work (which my husband and I will do much of but we also have full time office jobs so we'll be busy )  We are expecting to spend around 10,000 to 15,000 to fix it up.

My question is, when do we get the house inspected?  (I realize that more traditionally you'd do this before taking ownership but we felt this property and location was worth the risk given the low cost)  We are thinking 60 days from time of possession to have it finished.  I'm assuming I don't want to get an inspection as soon as we get possession before all repairs are made since we will need one when we get it refinanced?  Or do we get an inspection right away so we know more specifically the issues we need to address?  Or do you even need an inspection and it's just the appraisal that would be required?

Any guidance is much appreciated!

zinethstache

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Re: Refinance after HELOC/Inspection
« Reply #1 on: May 03, 2015, 02:31:31 PM »
We re-financed our home not long ago, all that was done at that time was a bank/institution ordered appraisal. There is no inspection per se on a home purchase/re-fi for the lender, the Inspection is purely for you to evaluate what price/negotiated items will be in your PSA. A mortgage appraisal does not dig deep into the inner workings of the property, it is a walk through with measurements and listing all the features/appliances. Then armed with that data the appraiser compares the home to others like it to come up with fair market value for the home. You cannot get the appraisal, it has to be ordered by your lender,even though you pay for it.

So in our case (we are in a pretty high COL area with pricier homes. We were looking to finance a total of 185k. that was 155k plus 30k HELOC that we had used to remodel the home. It is not a rental, but is our primary residence, and it appraised for $280k. We were then asked if we wanted to take out more on the loan and we declined.

Now I have heard that non primary residences are harder to re-finance/finance if you already own them. So you might have to search hard for a lender/broker who will finance a home you already hold the deed for. Good luck with your first rental!