There are times where a homeowner, who is in the process of refinancing their home, may want to take another loan for the purpose of buying a second home; naturally, this complicates things. This article will briefly discuss the details of obtaining a second mortgage while you are in the process of refinancing your home.
The major hurdle to obtaining a second loan while refinancing your home is actually qualifying for the second loan. Given the fact that you are currently paying down your existing loan, lenders may be hesitant to make another loan. In many cases, the way to qualify for the second loan is to refinance your first loan for the purpose of reducing your monthly expenses; this will go a long way towards qualifying. The key rule is that you can’t refinance on your primary residence while simultaneously looking for a second mortgage on another primary residence.
It is your best interest to use the same lender for both your refinance, as well as your second mortgage, for several reasons: first off, you will only need to submit one set of financial disclosures, and your lending institute will already be familiar with you and your needs – increasing your chances of obtaining a second loan.
When you are looking for a second mortgage, your lender will need to know how you intend to use the second property; are you using it as a secondary home or is it an investment property? If the property is an investment (e.g., a rental property), you may be able to use prospective rental income to increase your chances of qualifying for a loan. Conversely, if the home is a secondary home, that debt will work against you for purposes of qualifying for a loan.
At the Chernov Team we understand that knowledge is power, we also understand that whoever comes to the table most prepared leaves with the most; The Chernov Team always leaves the table with the most.