Cash out refi with DSCR loan

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Marty JohnstonPro Member
Lender · Wauwatosa, WI · Member since 2016 · 571 posts · 203 votes
5y

@Chris K. the Delayed Financing piece may be the best fit for you! Generally speaking, you receive better terms on Purchase Mortgage Transactions. Cashout Refinances usually see a 5% LTV hit (sometimes more!) over a Purchase transaction. As others have mentioned, you have Cashout refinance options with seasoning periods <6 Mos with some. Some of the best lenders have 12+ mo seasoning (one of my favorites is unfortunately 24-mo seasoning which I find a bit ridiculous!) 

Delayed Financing may be your ticket, as you get best of both worlds. If you have the cash to submit an all cash offer to win the home, you can then obtain a quick "cashout Refi" or Delayed Purchase, so long as you close within 60-90 days after purchasing the property. With Delayed Financing, you get the terms of a Purchase Mortgage, but in the form of a cashout. So still up to 80% LTV (assuming good credit, DSCR of 1.1+, fine area [not rural], and 1-4 Unit property [at least the lender I have in mind])

Since it's purchase money, rates are usually better too! PAR rates in the mid to high 4's on SFHs and high 4's - mid 5's on 2-4 Unit properties. Both have buy down options into the higher 3's or low 4's. There are a lot of lenders out there who offer this option, but not all of them promote it! [not sure why?]

Hope this helps!

[email protected]414-600-0123
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  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    5y

    @Chris K.

    Best rates and terms are after a 6 month seasoning period. There are lenders that have no seasoning, but they're generally on ARM's and cost more. Yes, you can do DSCR loans on the refinance.

    I'm assuming you want to use the new appraised value after renovation. 

    1Reply
  • Joseph A GonzalesPro Member
    Lender · Denver, CO · Member since 2019 · 104 posts · 70 votes
    5y

    If you bought it cash do the cash out refi the first 6 months is your best option. It is called delayed financing. You buy cash, refi with in 6 months get some of your cash back and buy another one and repeat. Delayed financing is a method for getting a mortgage after you've purchased a piece of real estate using cash. Yes, you can use DSCR depends on the lender and on loan amount you are looking 65% for loans under $100,000 and 75% with loans over $100,000. They will calculate the average monthly rent where your property is located UNLESS you have an active rental agreement stating more or less. Most of the time it has to be 1% or more UNLESS you are at 70% than it can be a little less. Easy Calculation: DSCR=Net Operating Income (NOI)/ Total Debt Service. Use a Mortgage Broker to help you!


    Let me know if you need help I am in Florida. 

    [email protected]754-201-6253
    2Reply
  • Timothy Hero
    Lender · United States · Member since 2020 · 1k+ posts · 499 votes
    5y

    I know a commercial lender that offers delayed financing, up to 75% LTV. Commercial lenders are usually .5 - 1% higher than banks.

    0Reply
  • Marty JohnstonPro Member
    Lender · Wauwatosa, WI · Member since 2016 · 571 posts · 203 votes
    5y

    @Chris K. the Delayed Financing piece may be the best fit for you! Generally speaking, you receive better terms on Purchase Mortgage Transactions. Cashout Refinances usually see a 5% LTV hit (sometimes more!) over a Purchase transaction. As others have mentioned, you have Cashout refinance options with seasoning periods <6 Mos with some. Some of the best lenders have 12+ mo seasoning (one of my favorites is unfortunately 24-mo seasoning which I find a bit ridiculous!) 

    Delayed Financing may be your ticket, as you get best of both worlds. If you have the cash to submit an all cash offer to win the home, you can then obtain a quick "cashout Refi" or Delayed Purchase, so long as you close within 60-90 days after purchasing the property. With Delayed Financing, you get the terms of a Purchase Mortgage, but in the form of a cashout. So still up to 80% LTV (assuming good credit, DSCR of 1.1+, fine area [not rural], and 1-4 Unit property [at least the lender I have in mind])

    Since it's purchase money, rates are usually better too! PAR rates in the mid to high 4's on SFHs and high 4's - mid 5's on 2-4 Unit properties. Both have buy down options into the higher 3's or low 4's. There are a lot of lenders out there who offer this option, but not all of them promote it! [not sure why?]

    Hope this helps!

    [email protected]414-600-0123
    2Reply
  • George DespotopoulosBusiness Member
    Lender · New York, NY · Member since 2016 · 936 posts · 287 votes
    5y

    @Chris K. there are direct investment property lenders that can do a 75% LTV cash-out refinance @ the 3 month mark if there's debt against the property and 6 months if it's owned free & clear. These are DSCR or property cash-flow loans. Rates are not too far off from conventional.

    MoFin Lending4.9152 Reviews
    WebsiteView Page
    2Reply
  • Nick BelskyBusiness Member
    Residential and Commercial Broker · Member since 2021 · 1k+ posts · 704 votes
    5y

    @Chris K.

    There is no seasoning after a cash purchase. You can refi the day after closing. DSCR rates are running about a point higher than conventional Cash-outs right now. Way less documentation and can close just as quickly as conventional. No DTI calcs either!

    Nick Belsky

    [email protected]
    Belsky Mortgage, LLC527 Reviews
    WebsiteView Page
    0Reply
  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    5y
    Originally posted by @Nick Belsky:

    @Chris K.

    There is no seasoning after a cash purchase. You can refi the day after closing. DSCR rates are running about a point higher than conventional Cash-outs right now. Way less documentation and can close just as quickly as conventional. No DTI calcs either!

    Nick Belsky

    ...if you want to use the purchase price or appraised value, whichever is lower right?

    0Reply
  • Timothy Hero
    Lender · United States · Member since 2020 · 1k+ posts · 499 votes
    5y
    Originally posted by @Nick Belsky:

    @Chris K.

    There is no seasoning after a cash purchase. You can refi the day after closing. DSCR rates are running about a point higher than conventional Cash-outs right now. Way less documentation and can close just as quickly as conventional. No DTI calcs either!

    Nick Belsky

    Unless title and appraisal causes delays, DSCR is quicker than conventional. Often 3-4 weeks. Banks are often 45 days from what my clients say.

    0Reply
  • Nick BelskyBusiness Member
    Residential and Commercial Broker · Member since 2021 · 1k+ posts · 704 votes
    5y

    @Timothy Hero

    Banks may take 45 days... I don't work with banks.  My lenders are normally closing these in 25 days or so.  If its a commercial property, even faster.  My commercial lenders aren't using AMCs so appraisals are the "normal" 1-2 weeks.

    @Stephanie P.

    The lender will use whichever is lowest; either the appraisal or purchase price.  Correct.

    [email protected]
    Belsky Mortgage, LLC527 Reviews
    WebsiteView Page
    1Reply
  • Zach Edelman
    Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
    3y

    Different lenders will have different rules regarding seasoning. Depending on how fast you are moving, I know there are certain DSCR lenders that require as little as three months seasoning to lever off the ARV. Bigger Pockets has a list of recommended DSCR lenders. I'd consult that list and see what each lender's policy is regarding short-seasoned cash-out refinances.

    1Reply
  • Brandon Stiles
    Northwest Arkansas · Member since 2023 · 58 posts · 20 votes
    2y
    Quote from @Marty Johnston:

    @Chris K. the Delayed Financing piece may be the best fit for you! Generally speaking, you receive better terms on Purchase Mortgage Transactions. Cashout Refinances usually see a 5% LTV hit (sometimes more!) over a Purchase transaction. As others have mentioned, you have Cashout refinance options with seasoning periods <6 Mos with some. Some of the best lenders have 12+ mo seasoning (one of my favorites is unfortunately 24-mo seasoning which I find a bit ridiculous!) 

    Delayed Financing may be your ticket, as you get best of both worlds. If you have the cash to submit an all cash offer to win the home, you can then obtain a quick "cashout Refi" or Delayed Purchase, so long as you close within 60-90 days after purchasing the property. With Delayed Financing, you get the terms of a Purchase Mortgage, but in the form of a cashout. So still up to 80% LTV (assuming good credit, DSCR of 1.1+, fine area [not rural], and 1-4 Unit property [at least the lender I have in mind])

    Since it's purchase money, rates are usually better too! PAR rates in the mid to high 4's on SFHs and high 4's - mid 5's on 2-4 Unit properties. Both have buy down options into the higher 3's or low 4's. There are a lot of lenders out there who offer this option, but not all of them promote it! [not sure why?]

    Hope this helps!


     When you say "Purchase mortgage transaction" are you referring to seller financing?

    Thanks

    0Reply
  • Marty JohnstonPro Member
    Lender · Wauwatosa, WI · Member since 2016 · 571 posts · 203 votes
    2y

    @Brandon Stiles The reference to a "Purchase Mortgage" meaning a financing a property on a purchase transaction - not seller financing necessarily.

    [email protected]414-600-0123
    0Reply
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