Which route to go for refi?

7 Replies

Greetings all,

I have recently purchased (and am in the process of rehabbing) 2 properties for buy and hold out of my home state. One is a 2/1 and the other a duplex (also 2/1's) Both were purchased with cash at 75-80% of the ARV. Both should cashflow nicely once tenants are placed and after the rehabs are done (this month). My question now is regarding the refinancing. Should I try to refi these together? Should I wait 6 months to season or is it better to get the deal done sooner than later? Would I qualify for a portfolio loan? ( These are rental properties #'s 3&4 for me) Should I try for a Fannie Mae conventional on one (for the low interest rate and then go bank loan on the duplex?

Interested to hear what some of you all might to do pull your cash out in this scenario... Thanks for the help.. 

Tom C

Hey there. Responding because I would also be curious on good ways to go about this. I haven't done a refinance but the actual loan you would get in the refinance is based on the ARV right?

It might be a good idea to consider the area (if you haven't already) as far as home appreciation goes.  If it is on he rise then maybe waiting those 6 months would be best.

Sorry I couldn't provide more help and I wish you the best of luck in this situation.

I think most people wait the six months to 'season' for the banks sake, not their own.  I would refi asap so you can reinvest that money elsewhere!

As for how... if you never plan on divesting the properties, then a blanket loan from a credit union would be my choice. If you think you want to get rid of one eventually, it may make that a process a little more intricate.

Depends on your DTI and other details, but it's very possible to get both properties financed post rehab under delayed financing Fannie Mae guidelines.

That's the route I have and am going at the moment.

@Tom Camarda  If you refi the properties not, then the loan will be done against the purchase price. If you season them for 6 months and then do the refi, you will be able to get a new appraisal and do a refi against that value.

Since you have less then 5 mortgages, you can continue to do cash-out refi with Fannie loans. You can have up to 10 Fannie mortgages, but once you have 5 or more, Fannie will not allow you to do a cash-out refi. You would have to go portfolio after you have 10 mortgages.

Start working with a mortgage banker that know what he/she is doing, so they can help you plan a few steps ahead. In this game if you find out an issue/hurdle too late then you are in trouble.

You should be able to refi them at the same time.

Upen Patel, Mortgage Banker

Federal NMLS# 1374243

Originally posted by @Justin R. :

Depends on your DTI and other details, but it's very possible to get both properties financed post rehab under delayed financing Fannie Mae guidelines.

That's the route I have and am going at the moment.

Delayed financing is the best option, if you don't need rehab and a higher valuation after the rehab. If you need rehab, then you have to wait for 6 months to get a new appraisal. Delayed financing is no longer an option after 6 months.

Upen Patel, Mortgage Banker

Federal NMLS# 1374243

Originally posted by @Upen Patel :
Delayed financing is the best option, if you don't need rehab and a higher valuation after the rehab. If you need rehab, then you have to wait for 6 months to get a new appraisal. Delayed financing is no longer an option after 6 months.

If you purchase a property for $200k cash and put $90k into a three month rehab, you can use delayed financing under current Fannie Mae criteria to take out a first loan for $200k.

At least, that's what I did on a property in June of this year.

@Upen Patel -- Is that what you're describing?  The "new appraisal" part of what you said sounds like it doesn't match what I said.

Thanks everybody. It's a little tricky, Fannie Mae wants to see 6 months of reserves for EACH property in the portfolio. Not a problem now but around prop 6 or 7 it might be... That said, delayed financing through FM is probably the route to go, since although I won't be getting 75% of the ARV, I will still be getting a low interest rate and the props will still cashflow...

TC