Re-finance @ 80% of the appraisal value

9 Replies

Hello BBer's,

I have a house in Houston that is taking so long to sell and the best way to handle this now -as it appears to me- is to refinance it with a lender that can do 80% cash out based on appraisal value (not sales price).

the house was last appraised at 320K when i converted it to conventional loan (out of hard money), I know I should've done this search when I did the refinance but I'm still a newbie :o)

A question to the Houston REI community, do you know any lenders in the Houston market that can do that?

All the best,

Ayman 

@Ayman Elmasik  

How does the Houston/Texas market look to you? Does it seem to have slowed down a lot, or is this house you are having trouble with in a certain area that may have something within that market that causes it to be on the market for a lot longer?

  @Peter Mckernan the market as a whole seems to be fine in the sector for houses that are around the median prices (up to 250K). this house is in an area which was flooded in 2015 so the whole are now have this stigma that makes the houses stay long in the market.

I think if I keep this house for another 2-3 years as a rental it will be still a winning deal as a whole but I want to free as much cash I can from it so I can use it in other deals.

Hello Ayman,

I'd love to help you out if you are okay with working with a lender who isn't directly in Houston.

A couple key points to consider:

1st - when did this switch over to conventional from hard money? Do you think the value has changed much since then?

2nd - since you did a cash-out refi from hard money to conventional there is a 12 month seasoning period before you can cash-out again.

3rd - since you property was recently listed for sale you are now capped at a 70% LTV if you do a cash-out refi, unless you wait 6 months from coming off market.
"Properties listed for sale in the six months preceding the disbursement date of the new mortgage loan are limited to 70% LTV, CLTV, and HCLTV ratios (or less if mandated by the specific product, occupancy, or property type – for example, 65% for manufactured homes)." - Per FNMA guidelines

I hope this helps!

Forgot to ask, is this a primary residence or investment property?

If it is an investment property then Texas50a6 rules do not apply, but normal FNMA cash-out rules would still apply. My 3 key points above will apply for primary or investment.

@Tyler Hodgson , thanks for the response I'm sure fine with working with someone who is not in Houston.

Please find my response to your questions below

1- the property was refinanced (closing date) on 27-May-2016, I don't think the value have changed much since then.

2- I don't think I will meet this condition 

3- I can try to rent it now and wait for the required 6 month period.

Last thing, this is an investment property.

I think this is easier clarified on a phone call, I'll PM you.

Regards,

Ayman 

Ayman,

I had a similar situation last summer. Go to the local banks and credit unions and ask about the cash out refi programs. I'm using a private bank but you'll be able to find one that will do the in-house loans that don't require the 6-12 month seasoning, you just have to keep looking. 

Best of luck!

I might be a bit slow, but, why do you need to refinance it - again? (If the $320k appraisal already gave you more borrowable equity than you needed to pay back to your HML - then, YOU were a bit slow too, for not taking out the extra cash there and then, right?)

As far as I can tell, borrowing more now can only HURT your ability to keep your current mortgage going while you're attempting to sell it. What am I missing?

I REALLY don't think it's a good idea to get into 80% leverage for multiple properties! My 2c...

@Brent Coombs you are right I did no figure that early on, I should've started my refi with a lender who can do 80% based on appraisal but like I said I'm a newbie here who is still finding his way.

@Ayman Elmasik , if it's against an investment property, I reckon many/most Lenders won't go to 80% anyway. More to the point, you'd be making it VERY hard for yourself to still retain positive cash flow with that much leverage, especially with the extra points they'd charge.

And not to forget the additional risk that YOU are taking if values go south for any reason! Cheers...

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