A question about refi of private/hard money loan

5 Replies

Good evening BP!

There are a few individuals I know who may be willing to fully finance a property acquisition with cash. Once I buy the property, what are my options to refinance with a conventional loan (at lower percentages I hope)? At what point can you refinance? I will "technically" own the property 100% myself as far as the bank knows, right?

If there is no lien against the property at the time you want to refinance, immediately after acquisition, then you can do a Delayed financing, refinance. This loan will allow you to get as much as the full purchase price plus refinance closing cost rolled into the loan based on the new appraised value and 75% LTV as non-owner occupied or 80% LTV as owner occupied.

If there is a lien against the property from the purchase, then you can either do an immediate rate and term refinance which will only refinance the pay off of the lien or you can wait 6 months and do a cash out refinance up to 75% LTV.

@Adam Britt you will have to source the funds on the purchase.  If you can't verify the funds were yours you will not qualify for Delayed Financing.

Thank you both @Kevin R. and @Melvin List . Seems that holding out for 6 months at least is the simplest bet to actually do it that way.

@Adam Britt No need to wait unless you want more then the original purchase price as far as a cash out loan will give you. To source the funds is easy, just show the loan that was given to you for the purchase of the property. So long as its not a lien against that specific property, you are good. 

It can even be a personal line of credit or a personal loan, it really doesn't matter where you got the money, it just cant be a lien against that property in order to qualify for the Delayed Financing type loan.

If that doesn't work for you, then yes, the next best thing is to season the title for 6 months and do a cash out to 75-80% LTV via Fannie Mae.

@Kevin R. Ohhh I see, thank you for the clarification. That makes sense!

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