Fannie Mae Cash Out Refi for 5-10 Units. New regulations?

4 Replies

I spoke to a lender yesterday and they said that there are new rules on cash-out refinances for the 5th through 10th property in Fannie Mae. As explained to me, it basically means that you can't do the typical process of purchase, remodel, season for 6 months, appraise, cash-out refinance. You will only be able to use the original purchase price.

Does anyone have any information about this? Or can perhaps tell me using small words what the 5-10 property cash-out refinances look like?

I believe what the lender is referring to is Fannie Mae's Delayed Financing Exception which is used to do a cash-out refi on properties 5-10 within (not after) 6 months of purchase. 

Here's a blog on the topic: All About Delayed Financing

Hi @Kyle J. . Thanks for the information. Do you know what the guidance is for properties 5-10 after the 6 month seasoning? I don't mind holding on to them that long to get better cash out.

Originally posted by @Bryan O. :

Hi @Kyle J. . Thanks for the information. Do you know what the guidance is for properties 5-10 after the 6 month seasoning? I don't mind holding on to them that long to get better cash out.

 I think this is what you want to look at...

https://www.fanniemae.com/content/guide/selling/b2...

My understanding is that for 5+ financed properties, Fannie Mae will not purchase a note on a cash-out refinance. We just did this, but we used a local credit union that uses the FM guidelines, but does not adhere to them as they do not sell their investment property loans. They had us jump through a few extra hoops, but we closed this week on a 30-year fixed rate loan @ 4.875%. Not bad for a property held in an LLC.

Originally posted by @Bryan O. :

Hi @Kyle J.. Thanks for the information. Do you know what the guidance is for properties 5-10 after the 6 month seasoning? I don't mind holding on to them that long to get better cash out.

I don't believe Fannie Mae allows cash-out refis on properties 5-10 after 6 months (i.e. outside of the Delayed Financing Exception). Your cash-out options at that point would likely be limited to using a portfolio lender, or getting a HELOC, or some type of commercial/blanket loan product.

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