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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16547
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Just elevated All Three FICO Scores above 800 according to

Customer Question

Just elevated All Three FICO Scores above 800 according to myFICO.comWe have a 4.0% Mortgage on a home valued @$550,000.00 with balance of @$388,500.00.We also own a commercial building with 100% Equity, valued conservatively around $700,000.00.Both properties are in Ohio, the County of Cuyahoga, City of Westlake.We'd like to access some of the equity in the commercial building, refinance the residential and perhaps take some cash either in the refi or as a separate ELOC.Which steps should be taken first, working on the Residential or Commercial property and on the residential side, what combination of Loans to access cash should we consider?Thank you.
Submitted: 9 months ago.
Category: Finance
Expert:  PDtax replied 9 months ago.

Hi. I'm PDtax, and will assist.

Customer: replied 9 months ago.
Awaiting your Answer..
Expert:  PDtax replied 9 months ago.

First, good for you that you have accumulated some real estate net worth.

Second, I would not do you a service if I didn't ask what you wanted to do with the funds, and if your commercial property was occupied/rented out, and for how much.

Third, your income will drive your ability to get the financing.

Expert:  PDtax replied 9 months ago.

Fourth, how much do you need from the hone? You might get another $45K in a cash out refi of your residence.

Commercial refi money will be harder to access, but easier if it's rented, so the rents support the debt.

Let me know.

Expert:  PDtax replied 9 months ago.

I have to step away at 2:30 for a meeting, just so you know...

Customer: replied 9 months ago.
Funds Proceeds on the Residential Side would, in addition to lowering the Monthly Payment, be used to upgrade a few items like our Inground Swimming Pool Heater, Outdoor Hottub repair/replacement, and payoff @$7k Credit Card currently at 14% APR.We pay ourselves Rent at the Commerical Building and we have a Tenant paying an additional amount. Total Rent: >$80,000.00 annually. We are looking at an Exit Strategy for the Business and Building and would put most of the proceeds of the Equity draw towards making the building more attractive to Investors/Purchasers.
Expert:  PDtax replied 9 months ago.

Ok. There's more here than just what to refinance first.

The best solution I can offer is some consulting time to discuss the various income streams and things like your current income, business venture/exit strategy, and a few other issues. No financial recommendations would be appropriate without more insight.

I'll post an Offer for 1/2 hour professional time to review, which we could do by phone after my meeting today or tomorrow. Accept, and I will assist.

Customer: replied 9 months ago.
What type of documentation would be required? Our financial records are physically at home and the business. I am done for the day at the business and at home.
Expert:  PDtax replied 9 months ago.

I don't need documents, just a more complete understanding of your financial picture. For example, can the building pay enough rent once you're business is gone to service the mortgage? That sort of thing.

I'll be available tomorrow morning if the time works. Appointments tomorrow PM and most of Friday are spoken for.

PDtax

Customer: replied 9 months ago.
Thanks for the clarification...FYI, we would sequentially try and sell the building before exiting the business as the business can be relocated easily, if we desire. So, the Rent after Exit Strategy probably is not a concern. Just trying to pretty the place up and give it curb appeal with the equity draw/loan/line.
Expert:  PDtax replied 9 months ago.

Then it sounds like the analysis I started had led you to the conclusion you were looking for. Great.

Thanks for asking at just answer. Positive feedback is appreciated. I'm PDtax.

Customer: replied 9 months ago.
Back to the original reason for the contact.Which financial transaction should we consider first? Residential or Commercial? Mortgage or Equity Lines/Loans?We'd like to take around $30k (total of $60k) on each property.Main concern is not impacting the hard fought rise to over 800 on the FICO and would like to get an Expert Opinion on the best way to ensure we qualify for the absolute, historical lowest, rate and terms.
Expert:  PDtax replied 9 months ago.

Sorry, the amount of time, new facts, changes in your question, are part of your query, but I don't think I can assist without the time I asked for in my offer.

I will opt out. If you decide to accept my offer, please post a time tomorrow morning that we can work with together.

Customer: replied 9 months ago.
Thank you. I cannot imagine spending another dollar for what was a simple, straight-forward question on what Sequence of Events we should pursue.
Expert:  Megan C replied 9 months ago.

Without doing a detailed analysis, residential loans are harder to deal with -- the easier thing to do is to refinance the residential and then get your commercial. With Commercial you will be dealing with a bank who will keep the loan, with the residential you are working with governmental regulations.

I say this because personally, I got a commercial loan myself in November, and then I am in the process of refinancing myself. I am about ready to strangle Wells Fargo with all their requests for documentation -- i asked my commercial lender (because we have a long standing relationship) -- what was up and she said that it's just hard to get a 15/30 year conforming loan because of all the Fannie/Freddie regulations.

As for your FICO score, it will naturally dip a little with the advent of new debt but not enough to make a difference in interest rates. At the end of the day, it's just a number.

Please let me know if you need anything additional. If not, please rate positive.

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