BRRR Financing, BRRRR Financing, Rate & Term, Cash Out, Delayed

[Jerry Padilla]

BRRR BRRRR....... Buy Rent Rehab Refinance.......Repeat

CASH OUT FINANCING

A cash out refinance is exactly what it sounds like. It is when you refinance your property and pull equity out of a property. The mortgage can either be paid off free and clear or can have enough equity in the property to make it worth refinancing and pulling equity out. Cash out refinances are available on primary and investment properties.

• The typical cash out financing is done after 6 months of owning the property, based on ARV and available for mortgaged properties #1-6. Please see delayed financing for less than 6 months after closing.
• On a primary residence you can pull out up to 80% LTV on a SFR and up to 75% LTV on 2-4 unit multi-families.
• On an investment property; A SFR if you have #1-6 mortgages you can pull out up to 75% of the equity and a 2-4 units is up to 70% equity.
• On an investment property; If you have 7-10 mortgages, including subject you can only pull out money in the first 6 months (delayed financing) that you own the property, if you didn't originally get a mortgage on the property. As long as the value is there (on a SFR 70% LTV and 2-4 units 65% LTV) You can take out up to the purchase price plus closing costs on the property.
• RATE and TERM REFINANCE - PROPERTY 7-10 If you are willing to pay the fees and go through two closings.... You can take out private or hard money on free and clear properties #7-10 and do a rate and term refinance with conventional to pull money out on them.
• PROPERTIES LISTED FOR SALE
  For a rate and term refinance transaction, the borrower must evidence that the listing has been cancelled, and must not have been listed for sale as of the date of the application.
  For a cash-out transaction, the borrower must provide evidence that the listing was cancelled at least six months prior to the date of application.

Cash Reserves Required For Other Properties Owned by Investor; (may use retirement funds)

• If the borrower has 1-4 mortgaged properties, an additional 2 months for every other SFR investment property and second home is required and additional 6 months for every other 2-4 unit investment property and second home
• If the borrower has 5-10 mortgaged properties, An additional 6 months for every other investment property and second home.

DELAYED FINANCING EXCEPTION

Delayed Financing Exception

A cash-out refinance within 6 months of a purchase transaction when no financing was obtained for the purchase transaction are allowed under the following parameters:

• The new loan amount is not 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 (subject to the maximum LTV).
1. 1. SFR mortgage #1-6 - 75% LTV
2. 2. 2-4 unit MFR mortgage #1-6 70% LTV
3. 1. SFR mortgage #7-10 -70% LTV
4. 2. 2-4 unit MFR mortgage #7-10 - 65% LTV
• The purchase transaction was an arm’s length transaction
• The purchase transaction is documented by the HUD-1, which confirms that no mortgage financing was used to obtain the subject property. The preliminary title search or report must also confirm no liens on the subject property.
• The source of funds for the purchase transaction can be documented (bank statements, personal loan documents, HELOC on another property). Any loans used as the source for the purchase transaction will be required to be repaid on the new HUD-1.

  Funds received as gifts and used to purchase the property may not be reimbursed with proceeds of the new mortgage loan. Funds of gifts are not allowed with investment purchases.

• All other cash-out refinance eligibility requirements are met and cash-out pricing is applied. This is allowed on primary residences, second homes and investment properties per cash-out guidelines.
  • Ineligible Transactions
    The following transaction types are not eligible as cash-out refinances:
    • The subject property was purchased by the borrower within the six months preceding the application for new financing except if delayed financing guidelines are met.
    • Investor and second home borrowers with 7-10 properties are ineligible for cash-out refinance transactions unless all of the delayed financing guidelines are met.
    • The subject property is currently listed for sale
    • The existing mortgage is a “restructured mortgage”
    • Transactions in which a portion of the proceeds of the refinance is used to pay off the outstanding balance on an installment land contract regardless of the date the installment land
      contract was executed.
    • The new loan amount includes the financing of real estate taxes that are more than 60 days delinquent and an escrow account is not established.

  Freddie Mac's Guide to Refinancing, including Cash Out.

  Fannie Mae's Guideline to Cash Out Financing.

Fannie Mae Guideline for Cash Out, Mortgaged Property 5-10.

This information is accurate as of the time of posting. Please also verify the accuracy of this information at the time you are considering these options as guidelines change. 

Freddie Mac and Fannie Mae are both conventional lenders. They each have their own set of guidelines to be followed. There are investor friendly lenders that are able to specifically follow just one of the guidelines below. Below are the required LTV for Rate and Term Refinances.

Freddie Mac - min credit score : 620 - up to 6 mortgaged properties

Fannie Mae - min credit score: 620 - up to 4 mortgaged properties,

Min credit score: 720 - 5-10 mortgaged properties

THESE ARE FOR MORTGAGED Properties 1-6; For Freddie Mac, a Rate and Term Refinance for a Primary Residence;

• 95% for 1 unit
• 80% LTV for 2-4 units

THESE ARE FOR MORTGAGED Properties 1-4; For Fannie Mae, a Rate and Term Refinance for a Primary Residence;

• 1 unit - 95%
• 2 unit - 85%
• 3-4 unit is 75%

THESE ARE FOR MORTGAGED Properties 1-6; For Freddie Mac, a Rate and Term Refinance for an Investment Residence;

• 75% for 1-4 Units..... Up to 6 mortgaged properties allowed.

THESE ARE FOR MORTGAGED Properties 1-4; For Fannie Mae, a Rate and Term Refinance for a Investment Residence;

75% for 1-4 Units

7-10 Mortgaged Properties; For Fannie Mae, a Rate and Term Refinance for an Investment Residence;

75% for 1 Units

70% for 2-4 Units

Fannie Mae Guideline for Rate & Term, Mortgaged Property 1-4.

Fannie Mae Guideline for Rate & Term, Mortgaged Property 5-10.

Freddie Mac Guideline for Rate & Term.

This information is accurate as of the time of posting. Please also verify the accuracy of this information at the time you are considering these options as guidelines change. 

Some of the areas we provide financing, but are not limited to are; 

Syracuse, Auburn, New York, Newark, Jersey City, Buffalo, Cheektowaga, Rochester, Batavia Seneca Falls, Albany, Schenectady, Baltimore Columbia, Towson, Providence, Warwick, Springfield, Greenfield Town, Portland, Lewiston South Portland, New Haven, Milford, Bridgeport Stamford, Norwalk, Worcester, Hartford, Boston, Philadelphia, Reading, Camden, Reno, Carson City, Fernley, Albuquerque, Santa Fe, Las Vegas, El Paso, Las Cruces, Dallas, Fort Worth, Houston, The Woodlands, San Antonio, New Braunfels, Austin, Round Rock, Killeen, Temple, McAllen Edinburg, Corpus Christi, Kingsville, Alice, Brownsville, Harlingen, Raymondville

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