When does seasoning peroid start?

2 Replies

My understanding is if someone was to purchase a property in cash, pay for the rehab out of pocket, and then look to do a cash out refinance into a conventional loan, there is a 6-12 month seasoning period.  When does the clock actually  start? Closing, having the lease start, when?

Also, having an apprasial done prior to the tennant moving in (ie property is still clean) must be a positive. But if you can't refi for 6 months you'll  have to get another ordered by the bank right?

Thanks

The clock starts from the day you purchase the property.

A bank won't use your appraisal anyway, they'll order their own, so no need to get one at the time of purchase unless you are having a hard time valuing the property for acquisition.

Seasoning is usually measured by the occurrence of certain events. Time is just one part. ie the loan may be considered eligible for a release of escrows once the property is 90% leased for 60 days.

As for appraisal purposes, appraiser are required to provide a sales and transaction history as part of an appraisal. If you do not have a good story, a significant increase in less than a year is not likely. Additionally, most lenders want a current appraisal, less than 90 days old so i would  recommend an appraisal at least 90 days after the value creating event such as a new lease, to season both the payments and get time from the last appraisal

Seasoning from a loan point of view is associate with payment history. If you have an owner financed note, note buyer are wanting to see a history of payments before offering a price to buy the loan.

   

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