Fannie loans 5-10 cash out ineligible

11 Replies

I ran into a scenario where I am doing a conventional cash-out refi on a 5th loan and due to this "B2-2-03: Multiple Financed Properties for the Same Borrower (05/27/2014)" section of the guidelines am ineligible. I spoke to a few people and they mentioned doing a HELOC on the property and then afterwards doing a normal rate-term refinance with no cash out.

Has anyone done this or can suggest options to this situation?

It is true you can't do cash outs past 4, but you can still do rate and terms. You mean a HELOC from your personal residence or other investment property? If so, I don't think it will work.

 As far as I know it must be financed with a note and deed of trust or mortgage in order to do rate and term refi.   You can only refi the amount of the loan plus roll some closing costs in as well. 

Many people use hard money or private money to do this.  I actually prefer rate and term refis over cash outs due to the lack of seasoning requirements, unless you're buying at a significant discount.

@Bryce Y. I meant a HELOC on a free and clear rental property to then be able to do the rate-term refinance. So I thought of doing a 75% LTV HELOC and then doing a rate-term refi at that amount to satisfy the guideline. Curious if others had done this without issue.

@Keith A.   - Yes you can do that I've had investors do that before and there are no seasoning time frames for rate and term refinances or for the loan on title

Or you can find a portfolio lender locally to do a cash out refinance usually up to 65-70% LTV on an ARM as portfolio lenders usually do not offer 30 year fixed loans atleast not with out steep premiums to be paid.

Albert Bui, Lender in CA (#345453), WA (#345453), TX (#345453), and TN (#345453)
949-514-5106

@Albert Bui  Thanks for the information.  I am going to checking banks to see how they are with doing HELOCs on investments properties > 4 and check on the requirements.

@Jerry Padilla  That is possible option and will check as well.  Thanks for the information.

@Albert Bui  

How exactly would a rate and term refi work if you're financing the acquisition and rehab with a HELOC? I just got done doing one and was told that there needs to be a note and deed of trust on the property you're trying to refi. A HELOC would be just like a cash purchase I'd think...

Originally posted by @Bryce Y. :

@Albert Bui 

How exactly would a rate and term refi work if you're financing the acquisition and rehab with a HELOC? I just got done doing one and was told that there needs to be a note and deed of trust on the property you're trying to refi. A HELOC would be just like a cash purchase I'd think...

 If you had a note and a deed of trust on the subject property then sure that would work fine but it sounds like your saying to use a heloc to buy another property in cash. You could do a refinance of the property that is encumbered by the heloc.

So end of day get a heloc on the rehabbed property then refinance is what I mean.

Albert Bui, Lender in CA (#345453), WA (#345453), TX (#345453), and TN (#345453)
949-514-5106

Gotcha I never knew you could do that.  Thanks!

@Albert Bui Yes, your last response is what I am thinking to do. Pull money out of free and clear property using HELOC. Use the cash to buy another property and refinance the property that is encumbered by the HELOC.

@Keith A.  Then begs the question, what about the new property you just bought and how are you going to get a cash out on it ?

I had an investor who would borrow short term from a well established private lender to secure a note and deed of trust against a property only to have it refinanced shortly thereafter as a rate a term. However, because of the relationship the costs of this private money were much lower than the typical.

This is another route that can be done similar to hard money but hard money is 2-5 pts and 12-16% usually, ouch.

Albert Bui, Lender in CA (#345453), WA (#345453), TX (#345453), and TN (#345453)
949-514-5106

@Albert Bui  The scenario you describe would be best using a private money.  I would have to see what would make sense to someone that would do that.  Hard money seems expensive for this purpose.

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