Cashout Refinance Subject TO

[Chris Miller]

• I Bought a house subject to 6 months ago. Closed at a title company I Have the deed I own the house I am looking to pay off the existing mortgage that is not mine. I am looking to do a cash out refinance. Can this still be done now? I am having a hard time in my area with lenders understanding what I am trying to do. One stated continuity of obligation issue the other said I have to have 6 months to a year payment history. Can I refinance? As I plan to keep this property as owner occupied now that I fixed it up. Thanks 

[Albert Bui]

Originally posted by @Chris Miller:

• I Bought a house subject to 6 months ago. Closed at a title company I Have the deed I own the house I am looking to pay off the existing mortgage that is not mine. I am looking to do a cash out refinance. Can this still be done now? I am having a hard time in my area with lenders understanding what I am trying to do. One stated continuity of obligation issue the other said I have to have 6 months to a year payment history. Can I refinance? As I plan to keep this property as owner occupied now that I fixed it up. Thanks 

 There ARE continuity of obligation rules that your subject to since you're considering a refinance and you're not Obligated on the current underlying mortgage (subject-to mortgage from seller).

The rule states that if you dont qualify for one of the rules under COB that your maximum LTV is limited to 50% LTV for all refinances within 24 months from the date of acquisition. You can cash out after 6 months from date of acquisition, but only up to the limited LTV restriction of 50%. Unless there is significant equity in the property 50% LTV may not be enough to payoff the current underlying mortgage.

Now here are the exceptions to lift the COB 50% limited LTV restriction:

- you inherit the property and it was transferred into your name either via legal award from a domestic partnership/marriage 

- you have been on title for 24 + months

- you took title to the property that was transferred from a partnership or partnership like entity (LLC, LP, etc) that you can document the ownership of 25% or more in

- you lived in the property and have been on title for atleast 12 months as a primary residence

- you have paid the mortgage for atleast 12 months 

- or you can demonstrate a relationship with the obligator (domestic partner, relative, family member, etc. )

If you qualify for one of the exceptions you are not limited to the 50% max LTV when considering fannie/freddie conventional cash out refinances on a subject to transaction. The most relevant exceptions are the last three above in bold.

Theres a lot of noise about the topic and its very confusing but the above are the actual rules atleast regarding conventional fannie/freddie financing.