Refinancing an investment property >50% renter occupied

February 20, 2017 10:21 AM

Our lender recently denied our refinancing application for our investment property because the condo building is more than 50% renter occupied. We'd like to reapply to another lender, but I'd really like to avoid calling each lender individually to ask if the renter occupancy ratio will be a problem for them. Is there a way to pre-screen for lenders who will not deny the application because of the rental occupancy rate? Is this a job for a mortgage broker? If so, me-mail referrals to Chicago-area mortgage brokers are welcome.
posted by slmorri to Work & Money (2 answers total)

Best answer: my google-fu wasn't helping exactly, but I'm pretty certain Fannie Mae has restrictions on mortgages they'll buy if there are too many rentals.

This hints at as much, indicating banks don't want to be left holding the bag (they'd rather sell it back to fannie mae, and add in all the other issues around banks/mortgages as fallout from 07/08, stricter underwriting etc etc).

So, yes, your best bet might be a broker, but chances are you'll be paying a higher rate on the note. And you'd want a specialized broker, not a typical detached single family home type broker, but one that knows condos/apartments and the ins/outs there.
posted by k5.user at 12:11 PM on February 20, 2017

Best answer: I was going to repeat was k5.user said.

You will be able to find a lender who will refinance this loan, but they will do so at a higher rate (and potentially higher closing costs). I recently had a friend looking at a rental and ran into the same issue. The difference in rate from the non fanny-mae backed loan was high enough to make the investment impractical.
posted by kookywon at 8:17 AM on February 21, 2017