I want to make my house a rental property but just wondering should I re-finance first and then get rental?

I talked to a morgage company and the guy suggested that I should just re-finance and then make it rental property, he said I don't have to declare that it's a rental property. Also, I won't be eligible for FHA and sorta individual loans.


Just wondering if someone knows if this legal or not?

I want to make my house a rental property but just wondering should I re-finance first and then get rental?
It is legal but if the bank asks you if it is for your residence you cannot lie. That would be the only thing that would make it illegal. As for the refi why do that. The faster you pay that house off the more you can make on rental. The morgage company will always say yes as they are making money if you do this. I have 4 rentals and try to pay them off as fast as possible. Think of what can happen if you cant rent it out and now you have to make the payment yourself.
Reply:Do you have another property as your main residence or are you looking to buy. If you refi this property and you dont have another property yet, the best a lender will give you on your new primary is a second home, but it can not be anywhere close to where your original property that you intend to turn rental is located. If you already have another spot or you're going to move in with someone else then refi it and rent it out. better to refi as primary then income property because you'll get better rates and you can still do FHA as primary vs income property you can not do FHA. In situations like these there are ways to get tangled up so you have to be careful. Hope I helped.








"Email me at jdawson@gracefunding.org maybe I can help!"
Reply:You will have to refi while you reside in the house. Otherwise you have to get a commercial loan which requires 30% down (or at least 30% equity in the property).





After the re-fi goes through, you had best wait a bit before turning it into a rental, say 4 to 6 months, because you will have to change your homeowner's insurance, etc. and they could report that to the bank/mortgage holder. After you have lived in a house for a while and have a good payment record, the bank will likely neither know nor care that you converted it to a rental property.





Most owners of residential income property start by "outgrowing" their first home and instead of selling it to buy a bigger home, they rent it out and buy a second house to live in. As long as you manage your rental property well and keep good tenants, the rental income pays the mortgage, taxes and other expenses and eventually you develop a nice cash flow.