Need Help with Refinancing Options

[Seth M.]

Hi everyone,

I purchased a property via 2nd lien foreclosure in Los Angeles County. I am going to be an owner occupant in this property. I am having trouble finding a lender who will allow me to cash out the difference after paying off the remaining senior lien at closing and wanted to see if others have any insights. Situation below:

2nd lien purchase- 170k. Title recorded in my name in June. Property is now vacant.

Remaining 1st lien payoff- 680k

Appraisal- 1Million

My goal for the refinance is to get an 80% LTV product. $800k loan minus the 680k payoff at closing leaving 120k cash out. As of right now, the lenders my broker has spoken to are all willing to do a rate/term pay off for the senior lien but will not cash out. I have been in communication with senior lien throughout and also asked prospective lenders if 'reinstating' the senior loan temporarily would open up more options but so far no luck. I haven't gotten a clear "why" answer for the cash out limitations. Any thoughts/recommendations? Thank you!

[Kevin Luttrell]

@Seth M.

Some of what Caroline said is not correct. The conforming loan limit in LA county is $822k, so you can get a normal Fannie/Freddie loan instead of a Jumbo loan. 

You will need to already be occupying the property as your primary residence at the time of the refinance in order to get a primary residence loan and be able to cash out to 80%. 

There is a 6 month waiting period after purchasing a property before you can do a cash out refinance. This is a Fannie/Freddie guideline, so it applies to all Conventional mortgage lenders. The 1 exception to this rule is called Delayed Financing - if you purchased the property without securing a mortgage, you can do a cash out refinance within 6 months and the loan amount will be capped at the purchase price + closing costs and prepaids.