Cash out refi options and FHA

10 Replies

Hey BP,

I look pretty good on paper (credit, DTI, etc), but am having a hard time finding someone to do a decent cash out refi on on a couple properties I paid cash for. I have been offered 70% LTV of what money I have put into the property and not what the market or comps say its worth. I have also been offered a portfolio loan (one mortgage for two properties) for 50% LTV. Bush league I say. I have less than 5 mortgages so that's not the problem. I was hoping for 70-80% LTV of comps. Is that asking too much? Anybody know anyone who could help in Indianapolis Indiana? Also, I have owned both for less than six months.

On another note one lender told me FHA won't lend to me because I have more than 4 units. I said, "you mean they won't lend on something bigger than a 4 plex." He said, "No because you hold more than 4 units regardless of what they are or how they are financed or even if they are financed you can't get a FHA." I said, "If I own 4 sheds with deeds I can't get an FHA?" He nodded his head. That's incorrect right?

Thanks again!

@Josh C. I'd try Crane Credit Union or Financial Center Credit Union. I haven't used them myself (not at the point of a cash out refi yet), but I've heard they are good. If you give them a try, let me know what you find out please.

@Josh C. Maybe I'm misunderstanding something here but if you're trying to get FHA financing, that's your problem right there. FHA I also don't know of any lender that will do more than a 75% LTV cash out refi on an investment property.

Mike D'Arrigo, Pinnacle Investment Properties, LLC | [email protected] | 800 348‑0956 | http://www.investwithpinnacle.com

@Mike D'Arrigo I don't think I understand you either. Pit falls of forums. Two separate questions.

#1 am I able to get a FHA loan 3.5% down? If I have more than 4 units. No other FHA loan and I plan to live there for at least one year.

#2 where can I find a bank that does 75% LTV cash out refi I own free and clear? Product nonspecific. Not 75% what I have into it, but appraised.

Thanks again

I don't know anyone will loan 80% of appraised value it is a big risk for the lender because you could just walk away leaving the lender holding the bag.

Joe Gore

@Joe Gore what about 70% or even 65% LTV. I am not a banker but with 30% equity out there it seems safe. So what options do I have?

If you been offer 70% of what you put in the proprieties take it.

Joe Gore

Originally posted by @Rodney Kuhl :
@Josh C. I'd try Crane Credit Union or Financial Center Credit Union. I haven't used them myself (not at the point of a cash out refi yet), but I've heard they are good. If you give them a try, let me know what you find out please.

I'm closing my first two with CFCU next week. They offer 75% LTV [appriased value] on a 15 year term.

@Josh C. - you can get an FHA loan with 3.5% down for properties with 1-4 units (FHA does not insure properties with more that 4 units).

As for cash-out on investment properties, you can only go as high as 75% LTV if it is a one unit, and 70% LTV if we're talking about 2-4 units. Private portfolio lenders might be able to offer something different, but these are the standards set by Fannie Mae and Freddie Mac, and followed by any lender that will sell their loans on the secondary market.

Your issue seems to be that you haven't owned the properties for long. I believe at least 6 months have to pass since the purchase date before you can use a new appraisal value - until then, lenders will use the purchase price to base their LTV calculations.

Some of them will even require a year to pass, or ask to see proof of improvements you've made to the property in order to justify the higher value.

Hope this helps.