cash purchase doesn’t fall under 6 month seasoning?

Question

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!

Corby Goade · Answer

@Rene Doyle Unless you have an immediate need for the cash, I'd wait the six months and do a traditional cash out.

Jon Huynh · Answer

@Shaun Weekes I will start planning for that. my primary was california and the rentals are in michigan so it caused confusion among things.

Shaun Weekes · Answer

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.

https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B2-Eligibility/Chapter-B2-1-Mortgage-Eligibility/Section-B2-1-3-Loan-Purpose/1736853471/B2-1-3-03-Cash-Out-Refinance-Transactions-07-03-2019.htm

Corby Goade · Answer

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.

Oliver Carey · Answer

@Jon Huynh Yes for Michigan

Matt McMacken · Answer

@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 · Answer

@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?

Oliver Carey · Answer

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

Rene D. · Answer

@Corby Goade Great, thank you!

Corby Goade · Answer

@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.

cash purchase doesn’t fall under 6 month seasoning?

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