u/Be_bold23

Trying to decide if this refinance makes sense.
Current loan:
6.875% conventional
~$4,830/month payment
Owned property just over 1 year
Brother currently co-borrower

New FHA offer:
5.955% rate
~$4,551/month total payment
~$280/month savings
~$201 cash to close
~$6k lender credits
No prepayment penalty

Closing costs are around $13.8k total, but most of it is financed into the loan, including the upfront FHA mortgage insurance. Estimated cash to close is only about $201 because there are about $6k in lender credits being applied toward closing costs.

Property is currently owner occupied with an ADU and rental income (long-term + mid-term rental setup). Main reason I’m considering this is because removing my brother from the loan seems easier now while it’s still owner occupied vs waiting until it becomes fully investment property status later.

Plank would be to:
-lower payment/rate now
-preserve reserves
-stabilize rental income over next couple years
-potentially refinance back into conventional later if rates improve

Would you do this or keep the current conventional loan?

I own a property in Redlands, CA that consists of:

- Main house: 3 bed / 2 bath (~1,250 sq ft)
- Detached permitted ADU: 1 bed / 1 bath (~400 sq ft)

The property appraised for ~$608k about 3 years ago AFTER renovations and after the detached ADU was completed/permitted.

The issue:
I’ve spoken with lenders like Achieve and Wescom, and they’re using automated valuation models / online appraisal systems that are valuing the property significantly lower than expected. It feels like the systems are not properly accounting for the permitted detached ADU or the property’s rental income potential.

Current setup:

- ADU operates as a monthly rental
- Main house operates as a hybrid LTR/MTR setup
- Gross rental income on this property was around ~$97k on my recent tax returns
- Schedule E still showed positive net rental income overall
-I Owe about 381k on the property

Credit / financials:

- Mid-700s credit score
- No late payments
- Stable W-2 employment (Respiratory Therapist)
- Existing mortgages paid on time
- Looking for roughly 80% CLTV HELOC

Questions:

1. Have any of you had issues with AVMs undervaluing ADU properties?
2. Did you find lenders more willing to order full appraisals instead?
3. Any recommendations for lenders/credit unions familiar with California ADU properties and rental income?
4. Would waiting until tenants move out help appraisal value significantly?

Trying to determine whether I should keep shopping lenders or wait until the property is fully stabilized and easier to show.

Appreciate any advice from people who’ve dealt with ADU appraisals or HELOC underwriting on this type of property

Thinking about opening a HELOC with Wescom. Anyone worked with them before? Would you recommend them? The FRC (Fixed rate conversion) offer sounds lucrative in my case.

Hey everyone! I have a property with a front house (3 bed, 2 bath) that I’ll be living in, plus an ADU (1 bed, 1 bath) that I’m mid-term renting. I’m cash flowing about $1,860/month. I’ve got roughly $300K in equity, and my mortgage is at a 3.25% interest rate. I do have a 6% fixed home equity loan with $70K left on it. Now I’m looking to add a third unit for about $120K. Given all this, what’s a smart way to finance or stack loans for that addition? Would love to hear your thoughts!

Hey everyone! I have a property with a front house (3 bed, 2 bath) that I’ll be living in, plus an ADU (1 bed, 1 bath) that I’m mid-term renting. I’m cash flowing about $1,860/month. I’ve got roughly $300K in equity, and my mortgage is at a 3.25% interest rate. I do have a 6% fixed home equity loan with $70K left on it. Now I’m looking to add a third unit for about $120K. Given all this, what’s a smart way to finance or stack loans for that addition? Would love to hear your thoughts!