Cash out refinance when I have too many mortgages

9 Replies

Hi BPers,

I have recently tried to refinance one of my properties to get some cash out (property increased in value since I bought it a few years back).

Problem is that since I already have 5 mortgages it seems that doing a cash-out is not easy and the best I could find is a 5/1 ARM with 8% interest.

What are the possible ways to get cash out of a property in this situation? All my mortgages are conventional loans.



I would continue to shop around for small portfolio lenders that will do portfolio/commercial loans on residential investment real estate. You should be able to get terms much better than that.

I got a 5/1 ARM cash out refi on a property last year at 5% interest. 30 year amortization. That lender only lends in a small portion of Wisconsin (where I invest) though!

@Oren H.  

if you have equity in your primary home you can cash out, that rule only applies to investment property's.

@Oren H.  I am in a similar situation and have not had any luck.  The portfolio lenders that I have found typically only lend for 5 or 10 years max and then want a balloon payment at the end.  I am not sure I will be able to find another refi again after 5 years so I have not been going for it. 

There are options for houses if you pay cash you can fix it and refi within the first six months of owning it but after the six months is up you are out of luck.  I am not sure if this is a Fannie Mae rule or just something that a lot of lenders follow.

You can always put all of your properties under one portfolio loan but the terms that I have found are not really great. I am not willing to trade a nice 30 year 4% interest note on an investment property for an ARM that is going to have a terrible rate in a few years and go negative cash flow.

Let me know if you are able to find anything that has a decent interest rate and at least a 20 year period.

@Oren H.    I just went through that (signing this morning), it was the worst loan refinance experience I have ever had.  It was even with a bank we have worked with many times in the past.  What I ended up doing was rolling the smallest loan into the second smallest loan still leaving a decent amount of equity it in which made the number of loans 4.  I don't know if this is an option for you.  They even had me sign something saying I have no financial interest in a property I sold over 14 years ago and am not on the title for, among other extremely detailed requests. I was tempted to include a letter with a picture of the golden gate bridge and include a note that I have no financial interest in this property or the london bridge..  LOL It is the largest file ever.   Good news, got a good interest rate.

In the middle of it I got mad and called around to a few other lenders so I would know what my options would be if it didn't go through.  I found a couple that said 5 wouldn't be a problem and one that said I sounded agitated and asked why.

He explained the last I have done recently was for my own home and the since things have tightened up he would need to have everything (I always do full doc anyway) and sometimes they ask for crazy things to put in the file to cover their butt and it is just the new norm.  Pretty much said expect it and just roll with it and it will be fine.  I am keeping his number for future reference.

If rolling the smallest loan in isn't an option, call the portfolio lenders.

Can you take out a line of credit?  Instead of the new mortgage?  Just a thought.

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I'm in a similar boat.  I'm considering selling one rental with significant equity and they purchasing (1031 exchange) another.  With the new property, I'd get a loan up-front instead of cash-out refi.

Go to a local bank and get a loan. They'll do a cash out refi with you
no matter haw many properties you have. You'll just need to accept the commercial loan terms. i.e. LTV of 70% or better, amortized over 20 or maybe 25 years, with a rate likely around 5 to 5.25% and a 5 yr balloon.

But the nice thing is they won't care about seasoning and they will do the cash out refi for you.  And you're going to need to start building a relationship with your local banks now anyway so you can add more houses.

The sooner you do, the better.

This is actually a growing trend.  We have had numerous clients going through 1031 Exchanges in order to qualify for purchase money loans (as opposed to cash-out refinance transactions) or to consolidate a number of properties into one larger property in order to reduce the number of outstanding loans.

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