4 Replies

You should be able to refinance quickly based on the price you paid.  If you want to use a new appraisal you may need to wait.  Really depends on your specific lender.  Start calling and see what lenders in your area say.

The standard 6-month seasoning requirement on cash-out refinances has been eliminated. You can now refinance your home within 24 hours of its purchase. FNMA introduced the Delayed Financing Rule in 2011. the program was designed to help buyers who were buying non-lendable homes and had to close in a very short time frame. A home would be non-lendable due to its habitability. Homes with a hole in the roof , for example, are unlendable because no person should reasonably live there. The same is true for homes with broken windows, lead paint, missing smoke detectors etc.. With Delayed Financing, a buyer can purchase a home with cash, make the necessary home repairs, and then perform a cash-out refinance on the home's existing equity. This strategy is great because homes sold in auction for example require full payment, but by law banks in many states aren't allowed to technically approve a loan in fewer than 7 days. In these situations, the Delayed Financing program is a terrific fit. The home is bought with cash, and refinanced immediately. You can qualify for delayed financing as long as:

  • The cash used for the original purchase is documented to the bank
  • The new loan amount doesn't exceed the property's original purchase price
  • A title search  shows no new existing liens on the home

Usually the institution that offers this type of financing option will seek fraud-prevention measures. You will probably have to provide your loan officer with the original HUD-1 document from the closing. This proves that it was actually sold and at what price. You probably will be able to finance at or below the 80% threshold to avoid mortgage insurance.

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Jospeh is correct and hit on several important points.  Your refinance amount (new loan amount) cannot exceed the original purchase price, even with extensive rehab.  You must source the funds used for purchase.  You must complete this within six months.  Delayed financing is a great tool for investors!

Great info!  Delayed Financing is a great tool.  

For those that don't qualify for delayed financing, or want to cash out more than the original purchase price, we are finding many lenders now that will refinance with less than the traditional 6-12 months of seasoning.  

Rates will depend on many factors, including income from the property (if any), borrowers ability to repay, LTV, etc. A-paper / Bankable borrowers with a great cash flowing property with a 70% LTV can expect near prime rates.