Conventional Cash out Refinances: Niche Facts
This one should be pretty tame, we're just going to cover some facts about conventional 30YF cash out refinances on residential real estate that are applicable within the state of California. I'm going to try to cover some of the more commonly mis-stated facts, as well as things that are allowed when there are no pesky overlays at play.
Loan amounts. Conventional loan limits scale up with unit count. In high cost of living areas like Oakland, San Diego, Los Angeles, Piedmont, Alameda, Contra Costa, etc, they are as follows: SFR = $636,150, duplex = $814,500, triplex = $984,525, fourplex = $1,223,475. This is important, as if you cross this threshold it becomes a "jumbo" loan, and those are often more conservative.
Standard seasoning. Standard is six months from a financed purchase, not the 12 months many large banks or credit unions require. The 12 month wait is a common overlay.
Delayed Financing seasoning. None required for cash purchases, and certain financed purchases. Call for details on if your recent or future purchase qualifies.
Inherited properties or those legally awarded by a court (divorce etc). These also have no seasoning requirement prior to doing a cash out refinance.
Providing housing for your developmentally disabled or handicapped child, or elderly parents. If mom or your son fits that description and lives there, we offer the owner occupant interest rate and LTV.
Speaking of LTVs, here's my LTV cheat sheet that includes cash out refinances on the bottom two rows. LTV is 5% more conservative than this chart indicates once you're past six financed properties. There are sometimes ways to deviate from this, but you'd be giving up the government subsidized interest rate.
Counting financed properties. Only residential real estate counts. It can have 1 mortgage or it can have 5 mortgages, that one property counts as 1 financed property. Private mortgages and HELOCs also count.
You can have up to ten financed properties, and do a standard cash out refinance. The limit of four is a very common overlay.
Rental income can be counted before it appears on tax returns. Big banks and credit unions commonly overlay this and are more conservative than necessary.
Student loan debt consolidation. If the only purpose of the cash out refinance is to pay off/consolidate student loans, the interest rate will be more appealing, and LTV may be higher.
Use of cash out refinance proceeds for the down payment on your next property. Allowed with no seasoning. Again, this is commonly overlayed, but there isn't actually any seasoning requirement per Fannie.
Bookmark this page immediately for future reference, and get the that contains PITI calculator (with California property taxes etc), a live rate tracker so you can time your refinance to coincide with a rate dip in the market (if you're flexible on time), the latest mortgage news, tools for real estate agents, and a bunch of other resources.
Equal housing lender. This is not a commitment to lend or extend credit. Restrictions may apply. Rates may not be available at time of application. Information and/or data are subject to change without notice. All loans are subject to credit approval. Not all loans or products are available in all states. Bay Equity LLC, 28 Liberty Ship Way Suite 2800, Sausalito CA 94965.
