Cash-out Refi: Terms and Timing

3 Replies

Hi All,

I'll be needing a cash-out refi on a rehabbed investment property in KC in a couple months. Property is bought in cash so no loan on it currently. Haven't gone through this particular process before so I'm wondering:

1. What rates are folks seeing on 15- and 30-year notes? 25% down or 20% down, my credit and income are solid.

2. How soon do I need to involve the lender in this process? I'd like to refi as soon as the property is rented out (buy-and-hold).

Many thanks!

Brian

@Brian Bistolfo

In July 2017, we purchased a rental in the Waldo KC area through a bankruptcy auction which already had tenants. What we saw in trying to refi was 25% down and 4.75% on a 30 year if I remember correctly. What we were tripped up on was that the lender wanted to go off purchase price instead of appraised value. We decided to wait and let the property season for 6 months to a year and we'll try again then. Hopefully the difference in interest rates if they go up won't matter since we won't have to leave as much cash in the property.

Hope this helps,

Cameron

Originally posted by @Cameron Pendergraft :

@Brian Bistolfo

In July 2017, we purchased a rental in the Waldo KC area through a bankruptcy auction which already had tenants. What we saw in trying to refi was 25% down and 4.75% on a 30 year if I remember correctly. What we were tripped up on was that the lender wanted to go off purchase price instead of appraised value. We decided to wait and let the property season for 6 months to a year and we'll try again then. Hopefully the difference in interest rates if they go up won't matter since we won't have to leave as much cash in the property.

Hope this helps,

Cameron

 The only real way around this is to purchase cash and do delayed financing. Then you can bypass the seasoning and go off of apprised value.

If you don't use cash (or HML) you'll get purchase price+ repairs as the value. You can also sometimes get around this (at higher rate/fees) with a portfolio loan but that can be more complicated than just waiting for some.

@Cameron Pendergraft @Matt K. Excellent points and definitely need to look out for that ahead of time...I'll be sure to get those square with my lender before going for it.  Plan would be a cash purchase and rehab so that should make things easier.

Good to hear some ballpark rates too, many thanks!

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