BRRRR a primary residence?

9 Replies

I have a property that I am closing on and was originally going to BRRRR it but a couple of issues occurred in this...

1. My wife fell in love with the house and wanted to move into it.

2. The bank is telling me that I have to hold the deed in my name for 6 months before I can do a cash out refi.

I contacted a local mortgage bank and they were happy to refinance but they said due to their limitations as a small mortgage lender they don't have the ability to refi the 70% LTV of the appraisal but could refi the bridge/hard money loan used to acquire the property.

I was then recommended to speak with a regional bank to see if they had a better product that would fit my immediate needs and they stated the following:

120mth full pay out 4.45%

180mth full pay out 4.50%

5/1/30ARM 4.625%

7/1/30ARM 4.75%

10/1/30ARM 5.25%

If you do not intend to reside in the property as your primary residence, it will be considered an investment property

The main problem is that the house is being purchased with a hard money & the rehab is being done with a HELOC.

Is there a way where I can refinance without the seasoning deed? Both for primary and/or investment? Is doing an investment refi/cash out what exactly would happen if I did that option but lived there? I know these questions may sounds dumb, but I can’t say I was expecting this outcome on this deal...

It is standard practice for the 6 month seasoning period, you could live there but that is ultimately your choice.  Not really sure what your underlying question is.

Very few banks will cash-out refi in under 6 months. There are Fannie Mae rules about it. So unless they plan on holding the loan internally, it has to adhere to those rules.

You can do a purchase price plus reno cost refi anytime... but that doesn’t get you the increased value out.

6 months to a year is standard for a seasoning period. There are a few national lenders that may do it sooner than that but have higher interest rates.

Any bank will give you a loan 70% LTV (assuming you qualify) so thats nothing special. Yes, you can REFI while you live there. I think you may encounter a problem with the HML if you tell them you plan on living there during the rehab.

@Frank Geiger @Mike McCarthy & @Aaron K. Thank you for the answer. All are definitely consistent in regards to the why so thank you for that but in the other hand how does the BRRRR method work if Fannie Mae requires a deed/loan to be held/seasoned for 6 month before you can do a cash out refinance? Sorry if these questions are dumb I'm just getting into the investing world and an adoring investor and am really trying to get on the other side of property management.

@Nick Bolding the investor just keeps their money in for six months then refis and starts the process again.  It is better than keeping it in the property for 30 years.  Once an investor gets larger they can do this with multiple properties at the same time because they have more capital.

@Nick Bolding keep networking and find/communicate with more than one Lender. Let them know what you are trying to do and maybe they can point you in the right direction. Also, figure out how they underwrite deals. Those are the two biggest aspects of it. That way you don't get left hanging.