Hard Money Loan & Cash Out Refi!

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Hard Money Loan & Cash Out Refi!

Jaleen Anderson
Real Estate Agent · Denton, TX · Member since 2014 · 67 posts · 2 votes

So really this is a two question post that I would love to hear you guys insight on.

Alright Question #1) "Can you get cash out refi from the same lender who you received the hard money from or you have to go to another lender to get a cash out refi? (In reference to the BRRRR method.)

Question #2) Is there a way to get more that 10 mortgages (traditional limit), and What type of loan is that called?

thanks

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  • Abby Weinstock
    Lender · Baltimore, MD · Member since 2020 · 115 posts · 70 votes
    5y

    Yes, you can get a cash out refi from the same lender as the one from whom you got a HML (as long as that lender offers cash out refis).

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  • Jaleen Anderson
    OP
    Real Estate Agent · Denton, TX · Member since 2014 · 67 posts · 2 votes
    5y

    @Abby Weinstock Thanks a lot. I had confused myself by over complicating things. Thanks for the clarity!

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  • Jason Gorenchan
    Real Estate Lender · Green Bay, WI · Member since 2014 · 18 posts · 6 votes
    5y

    There is nothing stopping you from getting 10 mortgages.  That is a limit set by Fannie Mae so after that a bank can't sell your loan to them. But there are options.

    You can look at using commercial or portfolio lenders after you hit that limit. You can get a blanket loan on several properties that would only count as one mortgage and allow you to keep using conventional lenders,  etc.

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  • Jaleen Anderson
    OP
    Real Estate Agent · Denton, TX · Member since 2014 · 67 posts · 2 votes
    5y

    @Jason Gorenchan awesome insight! For the commercial /portfolio loans do you have to go through a hml or banks provide those as well?

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  • Jason Gorenchan
    Real Estate Lender · Green Bay, WI · Member since 2014 · 18 posts · 6 votes
    5y

    Most banks have portfolio programs so if your credit is otherwise good, you probably don't need a hard money lender. That said, many banks do prefer selling to Fannie Mae to reduce risk, and shy away from investors with too many properties and mortgages.  You may just have to call a bunch and see which ones in your area do a lot of portfolio loans and work with investors regularly.

    I would try smaller community banks and even credit unions. Many of them fill that niche doing portfolio loans for builders and investors.  The bigger banks don't tend to do them or are willing to make exceptions unless you're an extremely large client.

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  • Jason Gorenchan
    Real Estate Lender · Green Bay, WI · Member since 2014 · 18 posts · 6 votes
    5y

    And if you plan on holding them long term, think about a blanket loan on multiple properties. It only counts as one mortgage and is a way to get more than 10 properties financed through Fannie Mae lenders.

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  • Jaleen Anderson
    OP
    Real Estate Agent · Denton, TX · Member since 2014 · 67 posts · 2 votes
    5y

    @Jason Gorenchan you knowledge is much appreciated!!

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  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    5y

    @Jaleen Anderson and @Jason Gorenchan

    Having a blanket doesn't necessarily free up a slot for more Fannie backed loans.

    The rule is 10 "financed" properties.  If you have 5 properties and they're all under one loan, they're still all financed.

    Most DSCR lenders don't report on credit reports, but when you go for your Fannie loan after moving loans to the blanket or going with a DSCR loan, you'll have to show your taxes and the property(s) will show on your schedule E. The underwriter will ask for a mortgage history or evidence that it's free and clear (like a hazard policy with no mortgagee). If you can't produce evidence that it's free and clear and a mortgage shows up on it, even if it's in an LLC, it's considered financed and will go against your 10 financed properties.

    https://selling-guide.fanniema...

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  • Jason Gorenchan
    Real Estate Lender · Green Bay, WI · Member since 2014 · 18 posts · 6 votes
    5y

    Stephanie is right for the most part, And I should probably have asked for more info too since I deal more on the commercial side and multifamily.  The property type matters too and not all of them count towards the 10. I should have asked what the properties were.

    Here is a link to a good article that explains how they decide which properties and loans count towards the 10 limit, and which loans/properties don't count.  Suffice it to say, financed 1-4 properties are the big one.

    Here is the link. 

    https://selling-guide.fanniema...

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  • George DespotopoulosBusiness Member
    Lender · New York, NY · Member since 2016 · 936 posts · 287 votes
    5y

    Like others have said, some hard money lenders do both short and long term loans. And, some will give you discounts on the refi for using them twice on the same property. That's definitely something to ask about. 

    For #2, if you exhaust your traditional number of loans, you can just use a hard money lender or a non-qm lender. Hard money will be easier/quicker and non-qm will have slightly better terms but much longer process. 

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  • Dustin Lauer
    Lender · Orlando, FL · Member since 2016 · 340 posts · 115 votes
    5y

    @Jaleen Anderson. All day every day and no limit on loans with DSCR products. Not sure about your particular lender or scenario but it's very much regular business right down the fairway today. Good luck Jaleel!!

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