All Cash out refi possible?

Question

I did a cash purchase last week on 3-plex.  I want to cash out refi based on LTV appraisal using Fannie's delayed finance exemption.  But I am not clear if they currently use a straight up LTV or the actual cost of buying and fixing.

Fannie Site

"The new loan amount can be no more than                      the actual documented amount of the borrower's initial investment                      in purchasing the property plus the financing of closing costs,                      prepaid fees, and points on the new mortgage loan (subject to the                      maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based                      on the current appraised value)."

Where are people getting these gov loans based on ARV by appraisal?

*R

Richard Heine · Answer

I think the property will appraise much higher than what I paid looking at the comps. Cash out now gives me 70-75% of actual purchase price. After 6 months, LTV based on appraisal. I'll wait.

Antoine Martel · Answer

That is because you're looking at the delayed finance exemption.

There is another rule in there which states that you can do a cash out refinance after 6 months of owning a property based on the ARV and not the cash you have invested.

Richard Heine · Answer

I will have to call some more banks. The first three wanted 6 month seasoning but that goes by pretty fast. I have 5 properties coming up in August. The sales comps in my little patch have gone through the roof.  Hopefully, that will make a difference in the appraisal. I was buying five years ago but the day after Trump got elected I grabbed every door I could find.  Because of the really tight rental market most are Two Percenters now.

I bought a fixer last week that had ok curb. This time I didn't pretend to make a budget and schedule work. The day after closing I put the ad in FB Marketplace detailing the trade of labor for rent. In 24 hours I received 64 (unique ID) messages and took online applications. They next day it was rented.

So yes, I need to 'cash out refi' to keep the game moving forward and I want all the cash out. A two percenter can afford that.

Matt K. · Answer

isn't the entire point of delayed financing to be able to use appraisal vs purchase price? Wouldn't the last part apply?

subject to the maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based on the current appraised value)

Bob Green · Answer

Richard,

You may be able to approach your local community bank or credit union and get a loan cash out based on fair market value today or if this isn't an option their are unconventional lender who will loan based on fair market value after owning the property for 30-90 days.

Harjeet Bhatti · Answer

@Richard Heine Some time its not benefit to the client wait for 6 month to go with appraisal value.  You have to do your calculations if you cash  out today what will be cash out amount and if you do after 6 month what will be cash out amount at that time.

Richard Heine · Answer

Ah ha! Thank you. I am going to package this up wait a few months and shop it around. More later.

All Cash out refi possible?

Most Popular Reply