Refinancing problems - Do I have to wait a year?

24 Replies

I have a few new properties that I bought in cash and I wanted to refinance them now and roll the money into new properties. Pretty much the BRRR method. The only problem is that the mortgage broker that I am working with said that I have to wait a year before I can refinance them. Is this really the case?

To be more specific she said that I can refinance them now for 75% of the purchase price or wait a year and then I will be able to refinance them for 75% of the appraisal price. The other option is HML but they are asking for 9%+2 points at 75% of appraisal...

I would love to hear what our experienced BP members recommend doing? What is my best option? What should I do?

Thanks!

Originally posted by @Yoni Ramras :

I have a few new properties that I bought in cash and I wanted to refinance them now and roll the money into new properties. Pretty much the BRRR method. The only problem is that the mortgage broker that I am working with said that I have to wait a year before I can refinance them. Is this really the case?

To be more specific she said that I can refinance them now for 75% of the purchase price or wait a year and then I will be able to refinance them for 75% of the appraisal price. The other option is HML but they are asking for 9%+2 points at 75% of appraisal...

I would love to hear what our experienced BP members recommend doing? What is my best option? What should I do?

Thanks!

 Hi Yoni,

It's actually six months before you can use appraised value without restriction, not 12. But there may be overlays.

And in that first six months, using the 'delayed financing exception,' you can go right up to the purchase price in terms of loan amount, if and only if the appraised value puts that at the needed LTV (eg, you purchased all cash for $100k and the appraisal is at $140k). See above about overlays.

Originally posted by @Chris Mason :
Originally posted by @Yoni Ramras:

I have a few new properties that I bought in cash and I wanted to refinance them now and roll the money into new properties. Pretty much the BRRR method. The only problem is that the mortgage broker that I am working with said that I have to wait a year before I can refinance them. Is this really the case?

To be more specific she said that I can refinance them now for 75% of the purchase price or wait a year and then I will be able to refinance them for 75% of the appraisal price. The other option is HML but they are asking for 9%+2 points at 75% of appraisal...

I would love to hear what our experienced BP members recommend doing? What is my best option? What should I do?

Thanks!

 Hi Yoni,

It's actually six months before you can use appraised value without restriction, not 12. But there may be overlays.

And in that first six months, using the 'delayed financing exception,' you can go right up to the purchase price in terms of loan amount, if and only if the appraised value puts that at the needed LTV (eg, you purchased all cash for $100k and the appraisal is at $140k). See above about overlays.

My properties are all investment properties in llc's. I was told that only if it is your primary residence it is 6 months. What do you think?

For example, one of my houses I purchased for $150k and will probably be appraised at $210k. So I am sure that the LTV will be ok.

If what you are saying is right then what should be my next move?

Smaller local portfolio lenders are a great option for getting around the waiting period. I'm assuming your broker was saying that because he is working with conventional lenders. 

Originally posted by @Austin Fruechting :

Smaller local portfolio lenders are a great option for getting around the waiting period. I'm assuming your broker was saying that because he is working with conventional lenders. 

 So I guess that leads me to my next question. Does anyone know any good portfolio lenders in Florida?

Originally posted by @Raymond J. Rodrigues :

@Yoni Ramras I know of a few portfolio lenders here in the Miami area that I can connect you with. 

 Great, Would love the connections. Thanks!

Shop you local banks. Your looking for commercial lender that knows how real estate works. When I want to refinance, I visit 2 or 3 different banks. I make sure they know I'm shopping for a refi loan and I ask them to lay out their normal terms. If you don't like what they say go find another. tips... dress to impress, have your financials ready, and be prepared to sell yourself. Good luck

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You can cash out any time if you purchase in cash up to 70%ltv of appraisal value or purchase price whichever is lower. You can search for guidelines for delayed financing exception. If you can wait 6 month you can cash out 75% of appraisal value for 1unit and 70% for 2+units. 

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Originally posted by @Omar Khan :
Originally posted by @Brian Garrett:
Originally posted by @Ryan O'Mara:

@Yoni Ramras - in the commercial lending space every lender has their own seasoning requirements.  Some require 6 months to lend off full appraised value, some require 12.  At most they will lend 75% once seasoning requirements are met.  I have one lender who will do 70% after only one month.  PM me if you want more details.

Can you PM the lender that only requires 1 month of seasoning? Thanks in advance.

Really interested in this lender that only requires 1 month of seasoning. They must have have really bad terms because I find it hard to believe that a lender would do that (esp. in this day and age). 

If you're found this mythical creature, you are my new best friend :)

I checked into the program but the interest is higher than what I'm looking for at 6.5-8.5%.

UPDATE: So I had a talk with QuickenLoans for “delayed financing”. The first conversation was that I can get 75% of the appraisal up to the purchase price amount. That was great news and I was ready to go with them. 

To remind everyone of the details. I bought a property in cash two months ago for $150,000. The appraisal is around $210,000. 

Spoke to them again today and they said that they need to do a credit check to give me the exact terms. OK no problem. I knew my score was above 700. 

The agent from Quicken Loans got back to me after the credit score, which was 715, that the loan amount will only be around $100,000 which is only 50% of the appraisal. I told him that he had said 75% of the appraisal and he gave me some excuse about that he can’t sell the loan or get it approved. 

Well he sold me on his service by telling me that there’s probably no problem getting the 75% of appraisal loan. It wasn’t even close. What a waste of time and a credit check. I can’t stand when people can’t stand behind their promises. 

So, anybody out there that can make a promise and also follow through on it? I received emails from quite a few people and whoever can make good on their promises will be receiving a lot more business from me. 

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Originally posted by @Harjeet Bhatti :

You can cash out any time if you purchase in cash up to 70%ltv of appraisal value or purchase price whichever is lower. You can search for guidelines for delayed financing exception. If you can wait 6 month you can cash out 75% of appraisal value for 1unit and 70% for 2+units. 

The OP write that the properties are owned by LLC entities; I do not believe that any conventional finance lender would knowingly lend to such.

@Yoni Ramras - seems you are shopping for conventional financing, but the LLC ownership will not get conventional financing. When you talk to these lenders, don't leave that out and see if they can still offer you a loan; when they do, they will tell you to deed the property to yourself first and then deed it back to the LLC after the loan is in place - they will tell you to break one of the provisions of the loan with that "advice" ... . So then question their integrity ...

@Steve Babiak If you are holding title as 100% ownership from last 6 month we will cash out but not on LLC name.

Recently refinanced on two purchases simultaneously, one before the 6 months and one after.

The purchase outside of the six month window was 70 % of the appraised value.

The purchase inside the six was 70% of the purchase price. Also - if any portion of the purchase was with borrowed money (ie. HELOC), that portion goes directly back into your loan,heloc, whatever it was.

Originally posted by @Fahim Ahmad :

Recently refinanced on two purchases simultaneously, one before the 6 months and one after.

The purchase outside of the six month window was 70 % of the appraised value.

The purchase inside the six was 70% of the purchase price. Also - if any portion of the purchase was with borrowed money (ie. HELOC), that portion goes directly back into your loan,heloc, whatever it was.

 Hi Fahim,

Can you send me a pm with the contact details for the lender? It would be appreciated Thanks!

@Yoni Ramras

You're shopping for something that does not exist; conventional money for a property that is owned by an LLC.

Start shopping your local COMMERCIAL lenders, local banks with commercial divisions and mortgage brokers that do commercial loans.

Stephanie

I need all the opinions I can get on this one before I make a decision. After going back and forth with Quicken Loans I just got a call from the agent and he offered me the following for my SFR which is registered under an LLC:

15 year loan

$138,700 is the loan.

$6,700 closing costs (which is factored into the loan) for a total of $145,400.

Interest on the loan is %4.875

Upfront costs are only $500 appraisal fee.

$3,000 in escrow for taxes and home insurance.

Monthly payment will be $1,375 which includes taxes and insurance figured in.

The monthly rent is $1,650 so that will leave a cash flow of $275.

To remind everybody this is a SFR that I purchased 2 months ago and should be appraised at around $210,000. The house is in an LLC.

What do you think? Does it sound good? Should I go for it? Is there anything I should ask? Am I missing anything?

I also forgot to mention that I had purchased the house for $150,000 so I will be getting almost all of my money out ($138,700).

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