No cash out refinance seasoning

12 Replies

Are there lenders that will do a no cash out refinance on an investment property with no seasoning requirement? Don't know if it matters but the initial loan would be from a private lender.

Yes, and more than likely it's going to be a local bank or credit union that offers that kind of product. Search local banks/credit unions and start calling around to gather information. You could try making an excel spreadsheet to sort through everything.

@Eric Walsh If it isn't cash out the could do it for the purchase price the day you close. But why wouldn't you get a normal loan to begin with? Refi or purchase the qualifications are the same.

The property needs work. I don't think I would be able to get a conventional loan initially because of that. Also I don't know if this changes things but it is a 4 unit property.

@Eric Walsh as long as it is under 4 units conventional financing will be ok. So you are going to use PM - Rehab it and then get conventional financing?

Remember that your max LTV with conventional is 75% so if you buy it for 100k put 25k into it, unless you wait for seasoning (6 - 12 months), the max loan will be 75k (75% of the original purchase price)

Also make sure you have a lender run your finances before you use private money. Make sure you can actually get approved for the 75k or whatever before buying it. The requirements are the same for buying or a refi so just because you own the house does not mean you don't need to qualify

I want to disagree that you will only get 75% of the purchase price... Within the six months you can get 100% of purchase price plus the closing costs. I just closed on a cash out refi at month 4.

Example..
- 100k purchase
- 5k closing costs on purchase
- 25k renovations
- 3k on refi closing costs
------------
Cash out refi within 6 months = 108k
Cash out refi after 6 months is typically 75% of the appraisal

@Sean Pincus I'm really curious as to how you were able to do this before 6 months. Is it a special type of loan? Share your secrets!

None of the banks I've contacted have been willing to do this.

@Sarah Shockley

The reason you may be getting conflicting information at the bank is because they might be making an assumption that you want to base the cash out on the VALUE of the property. The cash out that you are allowed to do within the 6 months is for 100% of the COSTS of the house (not including renovation costs). They refer to this mortgage as a Delayed Mortgage or Delayed Financing

In order to qualify for Delayed Financing

  • The cash used for the original purchase must be documented to the bank (no gifts for the original purchase-- if it is a gift the situation then becomes a lot more difficult)
  • The new loan size may not exceed the property's original purchase price + closing costs (re-read my originally example)
  • A title search must show that no liens exist on the home
  • Proof that the home was actually sold (HUD-1 document from closing will do this)

Let me know if you have any other questions.

Is the house rehabbed already? Do you have a lease in place.?

Call every bank in your area, and find the ones activity looking to lend. As soon our rehabs are complete, lease signed , deed recorded with the county, I order appraisal and can cash out up to 75% of the appraised value, no matter what I purchased the house at or how much cash is in the rehab.

Obliviously I'm buying with cash and refiing to get my money out and move on.

@Dave Shellenberger, great advice. I talked to a banker last summer who could offer that same deal, although they were only willing to lend to the lower of appraised price or purchase+rehab costs. 

Explaining what I wanted took a while though. I'm curious what exactly you ask banks on the initial call to find out if they offer that sort of refinance.

Thanks in advance,

Adam Smith

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