When can I cash-out based on appraisal value?

Question

Hi All-

Right now the LTV of my loans are based on purchase price, or purchase price + documented rehab cost.  How long do i normally have to wait, before we can base the LTV on the appraisal value?

Eddie T. · Answer

Most banks that use Freddie or Fannie rules have a 6 month waiting period after purchase before you can use appraisal value before using purchase price.

If you find a bank that keeps their loans in house (portfolio loans) and do not package and sell their loans then you may find one that does not have the 6 month seasoning requirement. And they may let you use appraisal value immediately after a sale.

Your best bet is to find an investor friendly bank in the area you are investing.

Anthony Thompson · Answer

Maybe I missed something, but why does that matter?

Are you planning to take out some of the equity with a bigger loan?

Or are you trying to get rid of PMI? If your loan is FHA and was after June 3rd 2013 it may not matter, you may be stuck with PMI for the life of the loan regardless of the current LTV.

From a technically-interesting point of view I'm curious about the strict answer to the posed question. But from a real-world point of view I'm more interested in why the question is being asked in the first place.

John D. · Answer

@Shaun Weeks  Thanks.  Interesting concept.....<4 properties you needs to wait 6+ months, more then 4 properties you can't wait more then 6 months.

PM me if you work in California.

Shaun Weekes · Answer

Hello John D,

If you have under 4 mortgages in your name then you're looking at 6 months seasoning.  If you have 5-10 you can get cash out on delayed financing but it has to be within 6 months of the recording date.

I hope this helps Sir.

Luis Montanez · Answer

@John D. 6 months may not be required, I have not used them nor am I affiliated to them (so do your due diligence)  but Cole Taylor Mortgage (at Atlanta, GA) claims the following:

"We allow up to TEN mortgages per borrower, great rates, low fees, great service and QUICK turn around times! NO SEASONING REQUIREMENT for cash out or rate and term refinances. First 4 mortgages only require 620 credit score, mortgages 5-10 require a 720 credit score.

Cole Taylor Mortgage LOVES INVESTORS: • ?NO Seasoning Requirements • ?620 Minimum Credit Score • ?Up to TEN Cole Taylor financed properties allowed • ?Extremely competitive rates and low fees • ?FULL “PRE-UNDERWRITING” completed as a TBD property so once the buyer FINDS a property, they are approved! Contact me for more information: Michele Bledsoe/Cole Taylor Mortgage Investment Pro 678-735-7417-Direct mbledsoe@ctmtg.com WE CURRENTLY ORIGINATE LOANS IN: Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Wisconsin"

see there profile at LinkedIn:

https://www.linkedin.com/company/cole-taylor-mortg...

John D. · Answer

@Luis Montanez

In my case, I don't really need to wait for appreciation.  Example property:

$170k purchase price (via reo auction)

$46k rehab cost

$216k total cost

$315k appraisal value after rehab

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How long do i have to wait to have a bank use the appraisal value, not the total cost value, in the calculation.

Luis Montanez · Answer

@John D. It all depends how fast are properties appreciating in your area, to give you an Idea, look up your property address in websites like zillow.com or neighborhoodscout.com.  In general banks will not lend you more than 70% of the property's market value.

In summary, based on basic economic terms, It all depends on supply and demand for housing in your area.

When can I cash-out based on appraisal value?

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