Investor · Los Angeles, CA · Member since 2015 · 63 posts · 10 votes
Ok heard a lot about seasoning if you want to refi from one initial purchase loan into another after rehab, but wondering about if I buy a property (SFR or Multi) with cash, and then fix it and increase the value, if I want to refi to get my cash back out, will I be subject to "seasoning"??!!!
Thx for any advice..
You have 2 different options here. Get cash based off the purchase right away ( Delayed Financing ) or wait 6 months to get cash based on the new appraised value.
Say you buy a home cash for 100K and after 2 months you want to do a cash out refinance. You can only get up to 70% of the purchase depending on what type of home it is ( SFR, 1-4 Unit )
Same scenario but now it's been 6 months and the home is worth 150K. Now you can refinance up to 75% of the 150K.
So to answer your questions it can be done both ways. You just need to get with a loan officer or broker who knows what they're doing in advance.
Delayed financing by the way has a lot of additional guidelines. You can google delayed financing through Fannie Mae and this will help you understand. Or again use a loan officer or Broker that is with it.
With Deferred Financing Exception, you can cashout up to the purchase price or 70% LTV, whichever is less, right away. If you can wait the 6 months, you can C/O to the highest LTV that new appraised value and lender overlay will allow, probably 85%.
@shaun weeks and I here are obviously just discovering this reading of the guidelines; have you actually done it Brad? Common underwriting objections?
I've heard people talk about it on the Broker Forum since around 2011, but no, I've never even tried to get one through. I think (not sure) a main sticking point would be the verified sourcing/seasoning of the cash that was used to buy the house in the first place. There is probably a good bit of fallout right at that point.
Also, how often is it likely to come up anyway? As a "2-hatter", I would be wearing the HM hat to provide A&D money and then put on my residential LO hat if they want the lowest bank rate for the refi.
I've heard people talk about it on the Broker Forum since around 2011, but no, I've never even tried to get one through. I think (not sure) a main sticking point would be the verified sourcing/seasoning of the cash that was used to buy the house in the first place. There is probably a good bit of fallout right at that point.
Got it. Well, BPers are often open to being guinea pigs. Who is it going to be?
Lender · Rochester, NY · Member since 2014 · 3k+ posts · 1k+ votes
10y
I just wanted to jump in ......... I see a lot of lenders jumping in here and I see some incorrect information posted..... Some by other lenders.... Not that it is actually incorrect, but some lenders have further overlays than Fannie Mae and Freddie Mac...... Some lenders are portfolio and may be able to do more than conventional lending, although most are close to conventional standards.
I do cash out refinances all the time, delayed financing as well.
PRIOR to 6 months..... You CAN pull out up to the PURCHASE PRICE + CLOSINGS COSTS (Your initial investment) as long as the given LTV is supported (75% SFR & 70% MFR for mortgaged property 1-6 and 70% for a SFR and 65% MFR for mortgaged property 7-10) for mortgaged Yes.... I have clients that purchase all cash and then do a few improvements and pull out their entire initial investment or close to it.
AFTER 6 months, it is the above LTV's for mortgaged properties 1-6, but based on the full appraised value.
With Deferred Financing Exception, you can cashout up to the purchase price or 70% LTV, whichever is less, right away. If you can wait the 6 months, you can C/O to the highest LTV that new appraised value and lender overlay will allow, probably 85%.
Wasn't that exactly my point (when I disagreed with your first post on this thread)?
ie. this latest post of yours looks to imply re-learning on your part has occurred. Congrats!