Real Estate Investor · Ft. Lauderdale, FL · Member since 2012 · 135 posts · 4 votes
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?
Lender · Rochester, NY · Member since 2014 · 3k+ posts · 1k+ votes
12y
Another possible option would be to pull hard money out on the properties and then refinance the hard money loans with a conventional mortgage on the houses 5-10.
Dallas, TX · Member since 2011 · 308 posts · 59 votes
12y
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.
Real Estate Investor · Ft. Lauderdale, FL · Member since 2012 · 135 posts · 4 votes
12y
@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.
Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes
12y
@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.
Lender · Rochester, NY · Member since 2014 · 3k+ posts · 1k+ votes
12y
Another possible option would be to pull hard money out on the properties and then refinance the hard money loans with a conventional mortgage on the houses 5-10.
Real Estate Investor · Ft. Lauderdale, FL · Member since 2012 · 135 posts · 4 votes
12y
@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.
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...
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.
Real Estate Investor · Ft. Lauderdale, FL · Member since 2012 · 135 posts · 4 votes
12y
@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.
Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes
12y
@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.
Real Estate Investor · Ft. Lauderdale, FL · Member since 2012 · 135 posts · 4 votes
12y
@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.