Hypotheitcal situation... I am looking to purchase a property in Baltimore City for 30k and will be putting 30k into it at which point ARV will be 100k. I will be using this property as a rental and because I do not want to keep my cash tied up and would like to use those funds to invest in another property, I was hoping to refinance. I have spoke to numerous mortgage companies and the consesus has been that you need to wait 6 months to be able to use the appraisal value of the property as opposed to the purchase price. Seems that this is a Fannie Mae regulation that affects all companies that I have spoke with. I was hoping to be able to refinance sooner then 6 months after taking tittle. My question therefore is:
a) does anyone know of a company that I can use to refinance within less then 6 months but wont cause rates to skyrocket?
b) are there any other options that one would use to approach a situation like this?
Thanks in advance!!
If you were to purchase and put in your/private money for repairs, you can get a delayed financing within 6 months of purchase. Its called delayed financing and is not treated the same as a Cash Out/Refi.
You will find that most local banks are more flexible with this.
I have read about that as well, but it doesnt let the loan value exceed the purchase price. I am not looking to get out more money then I put in, but I am looking to get a loan for the purchase price + renovation costs (60k in my example)
local lenders are who you need to approach for that kind of loan. They will do a cash out refi in less than 6 months but will only finance up to 70% of ARV usually. Sounds like your property will fall into that criteria which is good.
I don't have a. Local lender in Maryland as my properties are all in Oklahoma but have a lender there that allows me to do that.
You can do a cash out refinance now at 70% then refinance at the 6 month point and get the rest of your money out. Some lenders will not charge fees for the refinance if both the cash-out and refinance are done through them.
Call Joe Impagliazzo at 401.741.2916 he has done many similar deals in Baltimore. Tell him I referred you.
You can get the cash out based on ARV from a HML and then at the 6 month mark simply do a rate and term refinance to lower your payment. If you don't need the money right away I would just wait until the 6 months is up and do a cash out then.
No loan that is eventually going to be sold to Fannie or Freddie will allow you to cash out on new appraised value before the 6 month mark unfortunately.
I hope this helps and have a good one Sir.
Also remember that FannnieMae says,
"The property must have been purchased (or acquired) by the borrower at least six months prior to the disbursement date of the new mortgage loan..."
Not sure how long it will take you to rehab the property but by the time you purchase, rehab and rent the property you might be close to the 6 months limit anyway.
Also it's more beneficial to refinance after you have a tenant in there...some banks will use the rents as projected income which might help with getting the loan.
Disclaimer: I am not an attorney or a mortgage professional. Any advice/suggestions made here should be clarified with a professional.
If you're talking about a six month limit it's delayed financing that you're quoting. Delayed finacing is based off of a cash purchase. But in this case Danny is still needing to wait at least 6 months for new value. Now is he just wants cash out based off of the cash purchase it would be based on the 30K purchase price not he 100K ARV price.
I hope this helps everyone.
@Danny Colacicco - I am in similar situation as yours. Were you able to find a way through. I am getting similar answers from mortgage lenders and looks like we need to wait for 6 months before getting cash out refinance.
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