Cash out Refinance on free n clear property

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Cash out Refinance on free n clear property

Member since 2022 · 47 posts · 9 votes

Hello,

I have purchased a townhome with cash, free n clear. It’s a new construction from builder. I need to finance it now (to pay back the money I used for it). Is this also a cash out refinancing? Do I have to wait for the seasoning period of 6 months before I can refinance? I also heard in the BP forums about Fannie- Freddy increasing the seasoning requirements to 12 months. Bit worried about that.

Some of the rates offered for the conventional refinancing are high ( over 6.5%) where as I am able to get at ~5% from a local credit union for an investment property purchase but they won't offer the same for this cash out refinancing. Any good leads for the lenders are appreciated. I'm in DMV(DC-MD-VA) area if it matters.

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Robin SimonBusiness Member

Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes

Yes - the new Fannie guidelines are going into effect April 1 which will require 12 months seasoning period for cash-out refinances

https://capitalmarkets.fanniem...

A lot will depend on your financial situation/credit and the property but essentially you will have choices:

-Credit Union/Local Bank - hardest qualification, lowest rate but probably like you said big restrictions and long (12+ months) seasoning period for cash-out refis

-Conventional (Fannie) financing - now also 12 months

-Private Lenders ("DSCR Loans") rates will be a bit higher - 7/8s, BUT will allow cash-out refinances with pretty easy qualification and seasoning periods as low as 3 months only for some lenders

[email protected]

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Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
3y
Yes - the new Fannie guidelines are going into effect April 1 which will require 12 months seasoning period for cash-out refinances
https://capitalmarkets.fanniem...
A lot will depend on your financial situation/credit and the property but essentially you will have choices:
-Credit Union/Local Bank - hardest qualification, lowest rate but probably like you said big restrictions and long (12+ months) seasoning period for cash-out refis
-Conventional (Fannie) financing - now also 12 months
-Private Lenders ("DSCR Loans") rates will be a bit higher - 7/8s, BUT will allow cash-out refinances with pretty easy qualification and seasoning periods as low as 3 months only for some lenders
[email protected]
Harpoon Capital514 Reviews
Website View Page
3 Reply
Harold Sebesta
Lender · Marlboro, NY · Member since 2016 · 71 posts · 3 votes
3y
is the townhouse an investment or for personal use?
0 Reply
Jay HurstBusiness Member
Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
3y
Quote from @Amar Amar:

Hello,
I have purchased a townhome with cash, free n clear. It’s a new construction from builder. I need to finance it now (to pay back the money I used for it). Is this also a cash out refinancing? Do I have to wait for the seasoning period of 6 months before I can refinance? I also heard in the BP forums about Fannie- Freddy increasing the seasoning requirements to 12 months. Bit worried about that.
Some of the rates offered for the conventional refinancing are high ( over 6.5%) where as I am able to get at ~5% from a local credit union for an investment property purchase but they won't offer the same for this cash out refinancing. Any good leads for the lenders are appreciated. I'm in DMV(DC-MD-VA) area if it matters.

@Amar Amar If you paid cash, and the funds came from acceptable sources, you would qualify for the delayed financing exemption with Fannie Mae. You can refi within 6 months of closing date and pull UP to 75% loan to value or whatever you paid for the property which is ever is lower. Here is the full info from Fannie: https://selling-guide.fanniema...
Hurst Real Estate, INC4.991 Reviews
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0 Reply
Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
3y
Yes that is a cash out refinance, and yes you have to wait 6 months to get the full LTV. Local banks who offer commercial loans do not offer 30 year amortization schedules, you will most likely be on a 20 or 15 year increasing your monthly payments.
1 Reply
Amar Amar
OP
Member since 2022 · 47 posts · 9 votes
3y
Quote from @Robin Simon:

Yes - the new Fannie guidelines are going into effect April 1 which will require 12 months seasoning period for cash-out refinances
https://capitalmarkets.fanniem...
A lot will depend on your financial situation/credit and the property but essentially you will have choices:
-Credit Union/Local Bank - hardest qualification, lowest rate but probably like you said big restrictions and long (12+ months) seasoning period for cash-out refis
-Conventional (Fannie) financing - now also 12 months
-Private Lenders ("DSCR Loans") rates will be a bit higher - 7/8s, BUT will allow cash-out refinances with pretty easy qualification and seasoning periods as low as 3 months only for some lenders
Thank for for explaining all the options.
0 Reply
Amar Amar
OP
Member since 2022 · 47 posts · 9 votes
3y
Quote from @Harold Sebesta:

is the townhouse an investment or for personal use?
It’s an investment property and have long term renter in place.
0 Reply
Amar Amar
OP
Member since 2022 · 47 posts · 9 votes
3y
Quote from @Jay Hurst:

Quote from @Amar Amar:

Hello,
I have purchased a townhome with cash, free n clear. It’s a new construction from builder. I need to finance it now (to pay back the money I used for it). Is this also a cash out refinancing? Do I have to wait for the seasoning period of 6 months before I can refinance? I also heard in the BP forums about Fannie- Freddy increasing the seasoning requirements to 12 months. Bit worried about that.
Some of the rates offered for the conventional refinancing are high ( over 6.5%) where as I am able to get at ~5% from a local credit union for an investment property purchase but they won't offer the same for this cash out refinancing. Any good leads for the lenders are appreciated. I'm in DMV(DC-MD-VA) area if it matters.

@Amar Amar If you paid cash, and the funds came from acceptable sources, you would qualify for the delayed financing exemption with Fannie Mae. You can refi within 6 months of closing date and pull UP to 75% loan to value or whatever you paid for the property which is ever is lower. Here is the full info from Fannie: https://selling-guide.fanniema...

Thank you. Yes, I used heloc funds from my primary home. I believe it will appraise to a lot higher than the sales price. If I can wait for 6 months before refinancing, can I get 75% of the appraised value ?
0 Reply
Amar Amar
OP
Member since 2022 · 47 posts · 9 votes
3y
Quote from @Eliott Elias:

Yes that is a cash out refinance, and yes you have to wait 6 months to get the full LTV. Local banks who offer commercial loans do not offer 30 year amortization schedules, you will most likely be on a 20 or 15 year increasing your monthly payments.
Thank you.
0 Reply
Jay HurstBusiness Member
Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
3y
Quote from @Amar Amar:

Quote from @Jay Hurst:

Quote from @Amar Amar:

Hello,
I have purchased a townhome with cash, free n clear. It’s a new construction from builder. I need to finance it now (to pay back the money I used for it). Is this also a cash out refinancing? Do I have to wait for the seasoning period of 6 months before I can refinance? I also heard in the BP forums about Fannie- Freddy increasing the seasoning requirements to 12 months. Bit worried about that.
Some of the rates offered for the conventional refinancing are high ( over 6.5%) where as I am able to get at ~5% from a local credit union for an investment property purchase but they won't offer the same for this cash out refinancing. Any good leads for the lenders are appreciated. I'm in DMV(DC-MD-VA) area if it matters.

@Amar Amar If you paid cash, and the funds came from acceptable sources, you would qualify for the delayed financing exemption with Fannie Mae. You can refi within 6 months of closing date and pull UP to 75% loan to value or whatever you paid for the property which is ever is lower. Here is the full info from Fannie: https://selling-guide.fanniema...

Thank you. Yes, I used heloc funds from my primary home. I believe it will appraise to a lot higher than the sales price. If I can wait for 6 months before refinancing, can I get 75% of the appraised value ?

@Amar Amar if you want to tell me what you bought it for and what you feel like it would appraise for I can give you real numbers. also, is the property in VA, MD or DC?

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