I’m nearing the end of a REHAB on a property I purchased with cash two months ago. I am using cash for the REHAB as well, and intend to rent it out, and find a Bank to do a Cash out REFI.
I have already reached out to three banks I’ve used in the past, where two are only offering 15 year mortgages for Cash out REFIs and the 3rd is only offering Cash out REFIs on primary residences.
I am going to continue to look; however, I seek any recommendations from the audience on reputable banks or lenders that are offering 30 year Cash out REFIs on investment property at a competitive rate, and also doing so during the pandemic.
@Jamal Headen How long have you held title on the property? How is title being held? Knowing this will help people give suggestions on the type of lending to pursue. If you are going conventional, you will need to hold title in your name for 6 months before refinancing with cashout. Even then, things are a little trickier since the GSEs were recently directed to lower their investment risk from 10% to 7% of all holdings. You can work with commercial lenders and portfolio lenders (rate is a little pricier) and there are several out there that will do a 30 yr fixed (now you are back to the seasoning of the title).
Thanks for the response. I closed on the house in the latter part of February. I hold the title myself as this was a cash purchase. I hope that helps.
What is the current value of the house after repairs? For cash purchase, most lenders require 6 months seasoning and of course, a lease in place to do cash-out refi. There are lenders can do 75% LTV for 30-year fixed.
Thanks Wenda...So I have not finished the REHAB as of yet; however, I wanted to start rate shopping now as I expect the REHAB to be finished in the next couple of weeks and the property rented out soon there after. I'm tracking that there is a 6 months season period, but I wanted to grease the skids and get approximations before the time came so that I could manage expectations.
@Whitney Hutten For these portfolio & commercial lenders, do they require specific seasoning periods? And do they require an entity as well? Thank you in advance! :)
@Young Park ...most of the portfolio and commercial lenders hold to some seasoning - usually 6 months these days. There used to be lenders that would go as little as 30 days, but covid really changed the lending/risk environment and that has since stopped from what I've seen. Entity not necessarily required.
So lots of great advice above. The things I will add is to make sure when talking to lenders that you know what they will allow with their seasoning period. Some will allow a 6 months seasoning period but will only allow cash out up to the amount they can verify was put in. So if you bought for 200k and put in 35k they would max out your cash out refinance at 235k. So will allow you to go up to 75% of the new appraised value with cash out at the 6 month mark and some may require a 12 month seasoning period to allow up to 75% of the new appraised value with cash out.
Also make sure to ask them if their seasoning period is based on a closing date or application date. This is important because some lenders will allow you to close the day after the 6 months seasoning period and some will require the 6 months to pass before they allow you to apply and submit your full application. This is important because this can end up making it take 7+ months to complete your refinance as opposed to 6 months and 1 day.