Issues Refinancing in BRRRR due to mortgage seasoning

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Issues Refinancing in BRRRR due to mortgage seasoning

Patrick Jung
Rental Property Investor · Lakewood, OH · Member since 2015 · 27 posts · 5 votes

I was given issues trying to pull a HELOC on my SFR after rehab because of "mortgage seasoning"

I purchased this SFR with conventional 80% loan.

After rehab, I still was able to pull 36k HELOC with a 6.0% rate. (was aiming for 50k)

Lender said I haven't had loan more than 12 months and under valued the property. But said they were doing me a favor by not valuing

property at the original purchase price... which they should have due to not owning the property for more than a year..

anyone else have issues with what they call "mortgage seasoning"?

Going forward I will do a cashout refi instead of HELOC.

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  • Geordy Rostad
    Real Estate Broker · Kirkland, WA · Member since 2018 · 549 posts · 411 votes
    7y

    @Patrick Jung

    Cash out is probably a better way going forward. If you do HELOCs, they can screw your credit up if you borrow 100% of them just like maxing out a credit card. The flexibility of a HELOC is nice but they shouldn't be maxed out long term.

    How long have you had the 80% loan? Seasoning is different for different banks. Sometimes it's 6 months, other times it's 12 months. Before the seasoning period, they only want to give you original purchase price. After that, they will base off of appraised value.

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  • Jerry PadillaBusiness Member
    Lender · Rochester, NY · Member since 2014 · 3k+ posts · 1k+ votes
    7y

    @Patrick Jung

    A cash out refinance only requires 6 months seasoning and you can start the process prior to the 6 month mark. Keep record of all the improvements if need be to prove the value increase. 

    [email protected]585-204-6923
    PrimeLending 4.8583 Reviews
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