First time refinancing... looking for expert guidance!!

[matthewrlee]

I am looking to refinance two properties in my portfolio. I`ve never been thru a refinance before, so I`m looking for some expert guidance. I know I have a lot of questions, so please bear with me!



Property A, downtown Toronto

Type: Fourplex (I live in one of the units as my primary residence)

0px; border: 0px; outline: 0px; font-size: 11px; vertical-align: baseline; text-align: left; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; line-height: normal; font-family: Arial; color: #232323; background-color: #ffffff;">Names on Title: Mine

Names on Mortgage: Mine & mother

Purchase: $810,000

Current Mortgage: $600,000 (2.3% variable, 5yr, 35yr am, due on Oct 2015)

-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; line-height: normal; font-family: Arial; color: #232323; background-color: #ffffff;">Comparable sales: $1,000,000 - $1,100,000 (comps which I will provide to the appraiser)

Target Refinance LTV: 80%

New mortgage: $800,000 - $880,000

Capital left: $200,000 - $280,000

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Questions:

1) Not legally-zoned as a fourplex (only as single family). Will this be a problem? But I have a "Fire Retrofit` certificate from The Fire Guy.

2) Mother is guarantor on mortgage. If possible, would like to complete refinance thru a POA (or other means) so that my mom doesn't have to be involved (she lives out of town). Is that possible?

3) Am I able to get 80% LTV? I`ve heard that you can`t get up to 80% anymore on a refi for a rental. Does it matter that it is also my principle residence?

4) Appraisal process. Will they base value off comparables or off my rents? If comparables, I`ve heard that that appraisers never give market values (i.e. how much I could get if I sold), they always give lower values to protect the lenders. Will I get $1M-1.1M for an appraisal, or is that wishful thinking? How can I help the appraiser get to my intended value?

rder: 0px; outline: 0px; font-size: 11px; vertical-align: baseline; text-align: left; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; line-height: normal; font-family: Arial; color: #232323; background-color: #ffffff;">5) Due to my financial situation, I would like to have a HELOC that I can draw from (so I can live off the cash-flow as well as the mortgage pay down). When I refinance, can I just put a HELOC behind the first mortgage? Or will be getting a new mortgage altogether? Or can I get a new re-advancable mortgage with a HELOC?

6) What are the fees involved? Three month`s interest payments, lawyer fees, appraisal fees` anything else?

7)ows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; line-height: normal; font-family: Arial; color: #232323; background-color: #ffffff;"> What kind of rates would I be looking at for the type of mortgage/HELOC I`m interested in? (I`m in the process of speaking with Calum Ross, but wanted to get your perspectives beforehand).

8) When I bought this property and applied for this mortgage, I had a full time job with a good salary. I am now self-employed, with a not very good history of income. What happens now that I want to refinance (in terms of qualifying for the refinance)?



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Property B, downtown Hamilton

Type: Duplex

Names on Title: Mine, mother, father

Names on Mortgage: Mine, mother, father white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: #ffffff;" />
Purchase: $357,000

Current Mortgage: $285,000 (3.1% variable, 5yr, 30yr am, due on Nov 2018)

Renos: $100,000

Comparable sales: $500,000 - $550,000 (comps which I will provide to the appraiser)

Target Refinance LTV: 80%

New mortgage: $400,000 - $440,000

Capital left: $115,000 - $155,000

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Questions:

1) Similar question as #2 above, only now my parents are also down on title. Don`t want to have to involve my parents - would rather do thru POA. Possible?

2) This property is just finished being renovated. Is it better to get the appraiser in before or after tenants? (i.e. will the appraiser be looking at the property itself, or the leases/rents?)



Thank you all in advance! Your advice means a lot to me! I'm excited for this refinance... will be using these funds to roll forward for bigger and better things! (looking at 15-20 suite apartment buildings in Edmonton now!)

 

[Thomas Beyer]

80% refi will be tough due to income. HELOC is often 75% or more commonly 65% LTV. Best to discuss options with a competent mortgage broker who also needs to see 2013-2011 income statements and tax assessments. Getting your mother off the mortgage is easy as the asset is yours, but again it may impact amount due to income and credit worthiness. On the duplex all co-owners are on the mortgage, unless you change ownership only to you.

 

[matthewrlee]

Thanks Thomas! Sorry if I wasn't clear - I wasn't intending on getting my parents off the mortgage, I just wanted to avoid them having to drive 2.5hr to just sign some paperwork. How do other people do it when their JV partners are live out of town, don't want to be bothered with having to sign in person, etc.? In this case, the refinance would be based off of their and my income combined?



Will the property being used as a fourplex when zoned as single family affect my ability to refinance? Would the appraiser care about this?



Any advice/thoughts about the appraisal? Will the appraisal come in at where the comps say it should?

 

[Thomas Beyer]

Parents or JV partners can sign in their city, but for some documents they need a notary to witness signature. Just alert your lawyer to this fact and he can send the appropriate documents to them. Closing will take longer with documenst being sent back and forth.



Use matters, and assuming it is a rental property with 4 tenants it is far better to have them rented than vacant. it is tough to re-finance vacant rental properties.



Appraisals can vary +/- 5%.