Ideal refi products without long seasoning periods

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Ideal refi products without long seasoning periods

John Bernardo
St. George, UT · Member since 2022 · 15 posts · 7 votes

According to Fannie/Freddie guidelines, conventional refi products will require a 6 month title seasoning period before the full 80% of a cash out refi can be withdrawn. This restriction can really put the brakes on expansion and growth for less capitalized investors.

https://selling-guide.fanniema...

What are the best products and lenders which offer them that do not have this seasoning period? Are they strictly non-QM products?

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Jack Mawer
Lender · Member since 2022 · 338 posts · 374 votes
3y

A non-QM product such as a DSCR loan could be a viable option in a scenario where 6 months of seasoning is required via conventional. There are DSCR lenders out there who would be able to pursue a rate-term refinance of your rental property at 80% regardless of seasoning (as long as it was a true rate-term based off of your existing debt) and perform a short seasoned cash-out refinance off of the appraised value in as early as 3 months.

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  • Jack Mawer
    Lender · Member since 2022 · 338 posts · 374 votes
    3y

    A non-QM product such as a DSCR loan could be a viable option in a scenario where 6 months of seasoning is required via conventional. There are DSCR lenders out there who would be able to pursue a rate-term refinance of your rental property at 80% regardless of seasoning (as long as it was a true rate-term based off of your existing debt) and perform a short seasoned cash-out refinance off of the appraised value in as early as 3 months.

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  • Alex BekezaBusiness Member
    Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    3y

    @John Bernardo One thing that has made us very popular with BRRRR Investors from BP is the fact that we have been able to offer up to 75% cash out as early as 90 days regardless of any loan to cost type of constraint. (as opposed to 6 months with most lenders). This is a "Non-QM/Commercial" product not backed by Fannie/Freddie. However, you're very unlikely to find 80% cash out in this environment. 75% is the industry standard max for cash out in long term loan products.

    [email protected]818-606-8823
    Investor Property Loan5308 Reviews
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  • Andrew PostellPro Member
    Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
    3y

    @John Bernardo I need to clarify what you are linking because that interpretation is not accurate.

    First, when we refinance a property that we purchased with a loan, there is ZERO seasoning with Fannie/Freddie.  Fannie Mae and Freddie Mac underwrite 3 types of loans a little differently than each other - Purchase loans, No Cash Out loans, and Cash Out Loans.

    It is true that a "cash out loan" has some seasoning in most cases (the link you provided though was the EXCEPTION to this rule - delayed financing - which also has NO SEASONING)

    But a "No Cash Out" loan has ZERO seasoning - always! So when we purchase a home with Hard Money, Complete the Rehab, Rent the property....there's no seasoning there. That's the step-by-step BRRRR method and we don't face seasoning as investors (as long as we are working with good lenders that know what they are doing).

    Now if you are fortunate enough to purchase a home ENTIRELY in cash....then there's no seasoning there either but there are some specific nuances in that link you provided that make it a challenge which is why we use the technique described HERE when purchasing in cash.

    Also, this is JUST for Fannie/Freddie.  So what if you don't even qualify for Fannie/Freddie?  That's what the other loan types are for...and the ones we work with in that arena also don't have any seasoning.  

    So, the important piece here - if you are structured correctly, then NO SEASONING with conventional financing.  If using a different loan type, then choose one with NO SEASONING.  

    I hope all of this makes sense.

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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    3y
    Quote from @John Bernardo:

    According to Fannie/Freddie guidelines, conventional refi products will require a 6 month title seasoning period before the full 80% of a cash out refi can be withdrawn. This restriction can really put the brakes on expansion and growth for less capitalized investors.

    https://selling-guide.fanniema...

    What are the best products and lenders which offer them that do not have this seasoning period? Are they strictly non-QM products?


    You can do 80% LTV cash out refi, depending on the state. It is not 30 year fixed though. Only a 2 year bridge loan max.

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
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