So initially i was told by my loan officer that did my refi on my primary, that if i tried to do cash refi on my rentals that i would run into the 6 month seasoning rule. now after 4 months I spoke to his manager and they are now saying that because I bought the properties all cash, the 6 month seasoning rule does not apply? what exactly is the rule for the refi seasoning rule? this just delayed my refi stage by 4 months!
That's true, but it's a bit more complicated than that. The cash purchase must be an arm's length transaction and the LTV is limited and you can't roll many of your expenses in to the refi like you can on a traditional cash out refi. The manager is referring to the delayed financing rule- I'd chat the the lender at length.
I've done this a few times, and in retrospect, I probably should have just waited for the seasoning period and just done a traditional cash out You can pull more equity that way and the process is more simple.
There are some programs where 30 days seasoning is required. Title must be in llc.
@Corby Goade Great advise corby. i'm coming up to the 6 month rule anyway. They are making it seem as though it is standard conventional refi? no mention of 75% LTV. what i'm not looking forward to is another 30 days of explaining my finances and rentals to the under writer. my previous loan was great. bar rate 4.65% $1700 all in fees. small loan amount. but wondering if i could have done this a lot earlier?!?
Originally posted by @Jon Huynh :
@Corby Goade GoadeGoade Great advise corby. i'm coming up to the 6 month rule anyway. They are making it seem as though it is standard conventional refi? no mention of 75% LTV. what i'm not looking forward to is another 30 days of explaining my finances and rentals to the under writer. my previous loan was great. bar rate 4.65% $1700 all in fees. small loan amount. but wondering if i could have done this a lot earlier?!?
Delayed Financing is the rule that will allow you to refinance within the 6-month period. As @Corby Goade mentioned earlier there are restrictions to the rule. Below is a link that will help you understand Delayed Financing better.
Also, moving forward I would encourage you to use a Loan officer or Broker that has experience with investor type loans. This will help you build moving forward.
I hope this helps and have a great day.
@Shaun Weekes I will start planning for that. my primary was california and the rentals are in michigan so it caused confusion among things.
You could also do a delayed financing on cash purchases and recoup 100% of the funds used which is reflecting on your settlement statement. This must be done no later than 6 months after closing on the cash purchase and the funds used must be sourced to have been your own (no hard money or loans from a 3rd party). This will be processed as a purchase and not a refi allowing you to capitalize on better rates.
@Rene Doyle Unless you have an immediate need for the cash, I'd wait the six months and do a traditional cash out.
@Corby Goade yes that is my plan but what are the benefits of the 6 months seasoning?
@Rene Doyle if you wait six months, you get a higher LTV for your loan (75% rather than 65 or 70%), which may cover some or all of your make ready expenses. If you do the delayed financing, you get a lower LTV and they use your purchase price, not the appraisal price, so you can't cash out any forced equity.
@Corby Goade Great, thank you!
Private Money lenders provide up to 8o% LTV on Refinances with no seasoning requirements with rates starting at 4% with a great FICO and can close in 2 weeks low doc and no do options
@Oliver Carey Where are you getting that from? Are they charging you alot points to do the loan then? Private money hovers around 6-12% with 2 points and other fees. Does your place loan in Michigan?
@Jon Huynh I’d imagine there would be a portfolio lender somewhere close. I’d call every bank and their mamas to find the right one. Just have to make those relationships!
@Jon Huynh Yes for Michigan