How fast can I refinance a purchase?

6 Replies

I want to buy a home with private money. The seller will only accept a cash deal. How quickly can I go from closing a deal to refinancing this deal with a conventional bank mortgage? I want to pull out the cash to pay back the private lender asap. Is there anything I should do in advanced to expedite the process of pulling the private loan back out?

It depends on the lender, but if you're just looking for 75% of the purchase (and rehab) and not on appraised value, it should be pretty quick. You can even get started before the property closes and hopefully only have a few weeks wait. The slow part with lenders is generally getting approved in the first place. If you can do that, you should be able to get the loan within 30 days. 

Bryan, a private loan is not a cash deal.  A title report and lender's policy of insurance will still be needed with any loan, so make sure the seller is aware that you do not have your own cash for the purchase.  They may have another buyer who does, but it is better to lose the deal now then misleading the lender and losing it along with your earnest money.

You'll want to check with the bank or lender as soon as possible so you'll be structuring the purchase correctly, but if done right, you shouldn't have to wait. All banks & lenders can put their own guidelines on top of Fannie Mae or Freddie Mac guidelines. This is why some will say immediately and others may say you have to be on title for a specific period of time.

@Bryan Blancke

1 day.  The day after you close, you can apply for a cash out refi as long as you paid cash and there is no lien against the property.  This is called Delayed Financing.  However you can only get 80% of the appraised value (if a SFD primary residence), not to exceed your initial cash investment, plus closing costs and prepaids.

Let me know if you have any specific questions for your scenario that I can help answer for you.

@Zack Karp ,

This is a great tip. My "private" loan is actually a family loan. I want to get out of the loan quickly, but I also want to get the best rate. Will delayed financing offer me less favorable terms? Where can I get a delayed financing loan? 

Delayed Financing is a regular Conventional loan.  It's part of the guidelines.  Many lenders don't offer it because of their overlays, and some loan officers don't even know what it is.  Rates are the same as any other Conventional loan, there are no special pricing adjustments for Delayed Financing.

The source of the funds used will need to be documented with bank statements, so if you got a family loan, it's okay, but it will need to be paid back with the proceeds.  Which sounds like that's the plan anyway, based on your last post.

Make sure you are using someone experienced with this, because documenting this properly will save you a lot of underwriting time.  Time is money brother.