Cash-out refi in Charlotte, NC?

19 Replies | Charlotte, North Carolina

I’m looking for a bank that does cash-out refi’s here in Charlotte with no seasoning period or a very short seasoning period. I’m initially purchasing the property with cash. Every bank that I’ve called has a 6 month seasoning period which is required by Fannie Mae/ Freddie mac.  Does anyone know any banks with a shorter seasoning period?

If you are purchasing the property with cash, you will qualify for Delayed Financing, which doesn't have a seasoning period. Delayed Financing can be started as soon as you are ready to get an appraiser into the house to appraise based on the updates/renovations done.

Google - Fannie Mae Delayed Financing

You will have better luck with Mortgage Brokerages rather than Banks if you are going for a conforming Fannie Mae conventional 30-yr/15-yr mortgage - both with rates and investor-friendly service.

All the local banks I know of who will refinance in a entity want 12 months Seasoning. You might need to find an internet company to do this strategy with... 

@Souvik G. Is delayed financing based off of the ARV or only the initial purchase price? I'm looking for distressed properties that need work that I can add value to. I'm looking to get 75% of the ARV. Also, do you know any Charlotte banks that do delayed financing? Thanks

ARV. But your repairs have to be completed before the appraiser comes in. I haven't worked with Banks but almost all brokerages I have talked to will lend on the Delayed Financing exception.

The majority of bankers and brokers that I speak to are not familiar with Delayed Financing so I’ve bookmarked the section in Fannie’s guidelines to point them to, in addition to other articles and white papers to educate them.  Almost all of them have changed their tune and been willing to do the cash-out Delayed Financing.   

They’re able to start the process immediately after an all-cash purchase without any seasoning requirements (although most required me to wait a couple of days until the deed has officially been transferred into my name, which can take 1-2 days after the all-cash closing). 

The most you can cash out with the Delayed Financing is the purchase price plus closings costs associated with the first closing. Ex: If you bought a home for $50K and it has an ARV of $100K, the most they'll lend to you in the Delayed Financing is $50K plus closing costs, even though that's only ~ 50% LTV. That's a Fannie guideline, so don't get mad at the bank.

@Tim Sherrod - The mortgage is on the ARV, so they will lend upto 75% or 75k AFTER renovations are completed and the house becomes worth 100k. If you start the process as soon as you close, the appraised value is 50k, so they will loan upto 37.5k. The key here is to wait till the renovations are complete. Guess how do I know? :-)

The example you gave above is when you do a cash-out refinance within the 6 month seasoning period, and say you used a Hard Money lender for purchase, which still counts as mortgage.

The key here is an all-cash purchase in the individual’s name. 

If you purchased it in an entity’s name, you will have to wait for min. 6 months and the delayed financing exception doesn’t apply. Big Banks, like BoA and Wells want you to wait 12 months instead like @Nasar Elarabi mentioned. As I said earlier, the Bank underwriting departments are not investor friendly.

@Souvik G. - I’ve completed 3 Delayed Financings in a six month period so I’m speaking from experience as well.

You’re speaking from YOUR experience, which sounds like your deals needed renovations to appraise.   My deals have been strong enough to appraise without any significant renovations.  My banks haven’t cared about the condition of the property when I first bought it and whether any renovations have been done; all they care about is the condition and value at the time they are providing financing.   So if you’re buying at a significant discount, no renovations are needed.

@Souvik G. BIG banks are not investor friendly at all I agree. I have done the BRRR strategy multiple times and locally here in Charlottte I have yet to find a bank inside of charltote who will let you do a cash out refinance in less than 12 months.

@Alessandro A. - The Delayed Financing guideline is pretty straightforward (straight from the Fannie guidelines):

"The new loan amount can be no 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 on the new mortgage loan (subject to the maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based on the current appraised value)."

Two key points:

• There’s a time and a place for Delayed Financing (DF).   It doesn’t make sense for every deal. 

• One of my biggest suggestions when learning new concepts in real estate is not to take what people say as the gospel, especially on forums/blogs/etc (including me).   As you hear unfamiliar terms or concepts, use the power of google to educate yourself on the topics so that you aren’t misled by incorrect info or people that have a different goal/approach to RE than you. 

@Nasar Elarabi - When you talk to the banks about the immediate cash out refi, it's important that you specify the Delayed Financing Exception below. If you just say "Can i do a cash out refi after 2 months", they'll all say no. Also, it's only applicable if your initial purchase was all-cash and no mortgage financing is shown on the HUD.

A lot of bankers/brokers aren’t familiar with it until I send them links to the guidelines. Shoot me a message if you’d like me to send you some reference info. 

@Tim Sherrod

Great responses! 

@Alessandro A.

It is not too complicated to include Renovations on the HUD. I have clients that do this, so they can cash out sooner. You need an attorney and title company that are aware of how this works.

Many loan officers don’t know investor financing well and focus on primary home buyers. This is why you are being told you can’t cash out in less than 6 months, but as mentioned you can use delayed financing when you pay cash prior to 6 months. 

I know this thread is a little old but saw it and wanted to also confirm what Tim Sherrod is stating regarding Delayed Financing. I work for a direct lender here in Charlotte and when it comes to the Delayed Financing Exception:

"The new loan amount can be no 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 on the new mortgage loan (subject to the maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based on the current appraised value)."

If you're looking to get up to 75% of the ARV, you'll have to wait for the 6 months seasoning period.