Looking to Refinance before 6 Months in Memphis, TN

11 Replies

Hey All,

I'm needing a lender that will service in the Memphis, TN area.  I don't have a property yet - will be investing in single family homes - but want to have a lender lined up for the anticipated refinance before going forward with any deals. Do any of you have recommendations/referrals for lenders that have less than a 6 month seasoning period? I'll be paying cash for the purchase and rehab, and want to refinance afterward to pull out the investment (or as much as possible). Appreciate the feedback!

Thanks,

Armando

@Armando Alvarez

A cash out refinance can be done prior to 6 months if cash is paid for the property with delayed financing. 

Delayed financing goes according to current appraised value. 

With delayed financing, you have the restriction of pulling out a max of the purchase price plus closing costs prior to 6 months. 

If you include on your closing statements (which vary state to state - HUD-1/ALTA statement ) the renovation costs - and have them charged at closing...... This renovation cost now becomes an initial closing cost and can be included with the max loan amount that you are able to pull out prior to 6 months. This is at the underwriters discretion so verifying with your lender ahead of time would be ideal.

@Jerry Padilla is correct the trick is to put your renovation costs on the HUD and held in escrow you can then instruct the title company to pay your contractor in draws. This way you can refinance Purchase + rehab before 6 months. If you do not put the repairs on the HUD then you will have to wait 6 months to do a cash out refinance. Also one of the podcasts talks about this delayed financing strategy.

Aaron Chapman with SNMC is the lender I know who has done this several times. I'd call him and Brighton bank as Doug suggested and go from there. 

Good Luck! 

@Sean Tagge

I'm not familiar with this approach but for contrast, I purchased a property for cash $26K, put $30K cash into in renovations (no escrow or anything like that), and it appraised at $100K 2 months later when my lender ordered the appraisal. I was able to pull 65% out after my refi.

Originally posted by @Sean Tagge :

@Jerry Padilla is correct the trick is to put your renovation costs on the HUD and held in escrow you can then instruct the title company to pay your contractor in draws. This way you can refinance Purchase + rehab before 6 months. If you do not put the repairs on the HUD then you will have to wait 6 months to do a cash out refinance. Also one of the podcasts talks about this delayed financing strategy.

Aaron Chapman with SNMC is the lender I know who has done this several times. I'd call him and Brighton bank as Doug suggested and go from there. 

Good Luck! 

Make sure you get an OK on this method from a lender before using it. We tried this last year and never found a lender that would count the rehab costs as part of the value, even though we had them on the HUD and they were dispersed directly to contractors. Contacted over 20 lenders and none would do it, ended up just having to wait the 6 months anyway.

@James Marshall

Correct, you always want to check with the underwriters first. There are some mortgage lenders that are more investor friendly than others. 

Update: 

We just completed our first project in 38118 and we were able to use Aaron Chapman with SNMC to make this happen in less than 6 months! As Sean mentioned above you need to make sure any rehab costs are noted on the HUD, but even then not all lenders will know/understand how to close this kind of loan. Worked with a two different lenders for this project to get a few quotes with very different results...due to the verbiage in the delayed financing exception, it is still up for interpretation and some underwriters will tell you it is not possible just because they have never done this sort of loan before. Crazy part is my loan officer actually called some reps from Fannie Mae and even they said it was not possible because they had never done anything like it before.

Fast forward a month or two and Aaron and team were able to help us get the financing handled no problem, more proof that you just can't give up when one person tells you something is not possible in this industry! Hope this was helpful