How to Cash out ReFi When you can't

Question

Hi All,

I have a couple of properties free and clear that I would like to do a cash out refinance on.  The problem is that I did a "Short Pay" similar to a Short Sale but no deed transfer, and as a result I can qualify for FHA loans but not standard cash out refinance loans until 2020.

I wanted to hear thoughts on how best to tap into the equity in those properties as I would like to go forward and purchase more using the cash out refinance.  Is Co-Signing my only bet?

Are there any members out there that would be willing to work with me to help me co-sign if that was necessary?  Would find a way to make it greatly beneficial to all.

Thanks,

Paul

Stephanie P. · Answer

@Michael Plante

0x30 in the last 12 months is mortgage speak for a clean mortgage history (no lates) for 12 months.  Sorry for the vernacular.  Sometimes I get ahead of myself.

If you have a 710 mid score and W2 income that qualifies to carry the new loan, I would shop around for Fannie or Freddie financing.  Bank financing is always the first choice.  It's less expensive than any other form of financing and the bottom line for all of this is profit right?

Larry Kudlow always says "profit is the mother's milk stocks, business and the economy as a whole."  I wholeheartedly agree.

Here are my quotes of the day.

"Always go for the cheapest money you can and default to the cheapest money you can get" and "Don't let a deal slip through your fingers if you can make the number work".

Stephanie

Stephanie P. · Answer

@Paul Bryzek

@Antoine Martel

It sounds to me like you both need to use a non prime type lender that specializes in loans that don't involve Fannie Mae or Freddie Mac.  Co-signing is not your only bet by a long shot.

A sample loan for a self employed, non prime borrower would look like this:

• Half-way decent credit (660 and above, 0x30 last 12 months on mortgages) 
• Rate in the mid 6's with 1.5 points 
• on a 30 YEAR FIXED.

That's not bad money considering that's a NO INCOME VERIFICATION loan so there are

• no tax returns, 
• no pay stubs and 
• no profit and loss statements required.

Keep pounding the forums guys.  There are plenty of ways to get financed that don't involve Fannie and Freddie if you've got a little cash.

Happy investing

Stephanie

Paul Bryzek · Answer

Columbus Ohio, Cash Out Refinance is the safest type of debt in my opinion since you start with an asset free and clear, run an appraisal so you know exactly how much its worth, then leave 20-25% equity in it.  The intention is to take that money and reinvest it into more high cash flow properties in Columbus, purchased direct from owner

Robert Ellis · Answer

Hi Paul, it's great that you own the properties free and clear - that's a huge accomplishment.  I work with several lenders in Ohio and there are a few different options you may have that will allow you to use the equity to reinvest in more property.  PM me and I can get you more information.

Stephanie P. · Answer

@Ned Carey

Yes, as long as the mortgage company doesn't hit you for being more than 30 days late, that should qualify.  Lots of people pay around the 15th of the month, avoiding late fees, but not paying on the first when the loan is actually due to keep their money in their bank account a little longer.  Some companies do a 24 month look back for mortgage histories, others do 12, it just depends on the end investor.

Thanks for letting me clarify.

Stephanie

Brad Clarizio · Answer

For those in Columbus, where are you finding success with re-fi's? I have used FC Bank for years but they no longer do those loans. I have 2 properties with nearly 200k in value I want to cash out.

Chris Mason · Answer

Freddie Mac actually removed the black-and-white seasoning period for short sales entirely, about a year ago. Now, you have to run credit and plug it into the AUS to find out if it's a "yes" or a "no," rather than it automatically always being "no."

Short payoffs are super rare so I have no recollection of their specific mention in that announcement, but if anything I would expect it to be more lenient compared to a short sale.

I'd suggest finding someone in Ohio to run it and see.

Paul Bryzek · Answer

Correct - I am qualified for FHA for California for a primary residence, but this cash out refi is not and thats why double checking w/ my lender on the AUS to see if I can get a loan. He initially told me no based on a conversation he had with them where they told him Fannie & Freddie view a Short Pay the same way as a Short Sale - but it could have just been bad info.

Chris Mason · Answer

FHA is owner occupant only, so that's likely not useful for Ohio. I'd be focused on running AUS to see if FHLMC is doable. It's better financing.

Paul Bryzek · Answer

@Antoine Martel - My Lender will go as low as $25k, PM me for more info.

How to Cash out ReFi When you can't

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