Chattanooga Lenders With No Seasoning Requirement

BRRRR - Buy, Rehab, Rent, Refinance, Repeat
5yFollow

Chattanooga Lenders With No Seasoning Requirement

Jackson Malcolm
Property Manager · Chattanooga, TN · Member since 2020 · 18 posts · 18 votes

Hey BP,

I recently completed the rehab and placed tenants for my first single family BRRR deal in Chattanooga, TN. Now it is time to refinance!

I have been hearing from lenders that it is a Fannie/Freddie requirement to wait 6 months from the closing date before refinancing, or it falls into the “delayed financing” category, where you can only get financing off of the house’s purchase price - not the new appraised value.

I purchased the property with cash, and am 100% fine to wait the 6 months and collect pure cash flow if I have to, but I have seen numerous stories in the BP forums of lenders that do not have the seasoning requirement.

My question is - Do any of you know of lenders who will do a 30 year, fixed rate refi that do not require 6 month seasoning? Any related advice on the refinance is appreciated as well, as this is my first venture into BRRR.

Thanks!

2Reply
33 views

Most Popular Reply

Andrew PostellPro Member
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
5y

@Jackson Malcolm @Troy Miller and @George Randall so if you are speaking with a lender that will only base their loan on the purchase price then I would encourage you to seek another lender.  Now, maybe they said something different and it was lost in translation a bit but here's the things to keep in mind when buying with cash and using Fannie/Freddie loans.

  • The "Cash Out" limit is 75% for single family homes and 70% for 2-4 units NO MATTER WHAT.  No matter whether you have delayed financing or not - 75% is the limit.  For example, if you purchased a property for $80k, put $5k into the property and it's worth $100k...then 75% of $100k is $75k.  What should NEVER happen is if a lender says that they won't take your AFTER REPAIR VALUE into consideration.  Meaning, if they are saying 75% of the PURCHASE PRICE...that is absolutely wrong and you should seek another lender right away.  Now, understand that a lender is allowed to put extra rules ON TOP of the Fannie/Freddie guidelines.  We call these extra rules "Overlays".  So when we target real estate investor friendly lenders we are really targeting lenders with no "overlays".
  • Delayed Financing - Now here's where it can get confusion but it's really TWO options here.  If you purchase a property in cash you will get EITHER:
    • - 75% of the ARV (since that is the max anyway)....OR
    • - Your entire purchase price....WHICHEVER is LOWER
  • So in this situation if you purchase very aggressively, you might be leaving some money in the property using Fannie/Freddie money.  As mentioned above, you can certainly use a commercial style loan (and there are some 30 year fixed rate commercial lenders out there) but working with a lender with no overlays on the Fannie/Freddie side is paramount

    Sometimes when I type all of this out it might still not be 100% clear so feel free to ask any questions and I'll be here to help.  Oh, and I did write an entire post on how to avoid ALL of this that you can find HERE.

    Thanks!

      4Reply
      See this reply in the discussion

      5 Replies

      Jump to latestLatest
      • Troy MillerPro Member
        Investor · Chattanooga · Member since 2019 · 31 posts · 18 votes
        5y

        Hi Jackson. I'm in Chattanooga too. Very good question. I have it too. In my recent deals where I didn't want to wait 6 months to refi, I've had to do commercial loans that were on a 20 year amortization at either 75 or 80% LTV (depending on the deal). I'm interested though to see if I could find someone doing 30 year with less than 6 mo seasoning.

        1Reply
      • George RandallPro Member
        Lender · Chattanooga, TN · Member since 2016 · 58 posts · 23 votes
        5y

        I'm interested, too - as I have one coming up

        2Reply
      • Andrew PostellPro Member
        Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
        5y

        @Jackson Malcolm @Troy Miller and @George Randall so if you are speaking with a lender that will only base their loan on the purchase price then I would encourage you to seek another lender.  Now, maybe they said something different and it was lost in translation a bit but here's the things to keep in mind when buying with cash and using Fannie/Freddie loans.

        • The "Cash Out" limit is 75% for single family homes and 70% for 2-4 units NO MATTER WHAT.  No matter whether you have delayed financing or not - 75% is the limit.  For example, if you purchased a property for $80k, put $5k into the property and it's worth $100k...then 75% of $100k is $75k.  What should NEVER happen is if a lender says that they won't take your AFTER REPAIR VALUE into consideration.  Meaning, if they are saying 75% of the PURCHASE PRICE...that is absolutely wrong and you should seek another lender right away.  Now, understand that a lender is allowed to put extra rules ON TOP of the Fannie/Freddie guidelines.  We call these extra rules "Overlays".  So when we target real estate investor friendly lenders we are really targeting lenders with no "overlays".
        • Delayed Financing - Now here's where it can get confusion but it's really TWO options here.  If you purchase a property in cash you will get EITHER:
          • - 75% of the ARV (since that is the max anyway)....OR
          • - Your entire purchase price....WHICHEVER is LOWER
        • So in this situation if you purchase very aggressively, you might be leaving some money in the property using Fannie/Freddie money.  As mentioned above, you can certainly use a commercial style loan (and there are some 30 year fixed rate commercial lenders out there) but working with a lender with no overlays on the Fannie/Freddie side is paramount

          Sometimes when I type all of this out it might still not be 100% clear so feel free to ask any questions and I'll be here to help.  Oh, and I did write an entire post on how to avoid ALL of this that you can find HERE.

          Thanks!

            4Reply
          • Jackson Malcolm
            OP
            Property Manager · Chattanooga, TN · Member since 2020 · 18 posts · 18 votes
            5y

            @Andrew Postell This is great - this and your post on how to structure a cash out refi answer my question perfectly. @Troy Miller Andrew’s post should help you as well!

            1Reply
          • Jeffrey Holst
            Investor · Chattanooga, TN · Member since 2016 · 676 posts · 543 votes
            5y
            Originally posted by @Andrew Postell:

            @Jackson Malcolm @Troy Miller and @George Randall so if you are speaking with a lender that will only base their loan on the purchase price then I would encourage you to seek another lender.  Now, maybe they said something different and it was lost in translation a bit but here's the things to keep in mind when buying with cash and using Fannie/Freddie loans.

            • The "Cash Out" limit is 75% for single family homes and 70% for 2-4 units NO MATTER WHAT.  No matter whether you have delayed financing or not - 75% is the limit.  For example, if you purchased a property for $80k, put $5k into the property and it's worth $100k...then 75% of $100k is $75k.  What should NEVER happen is if a lender says that they won't take your AFTER REPAIR VALUE into consideration.  Meaning, if they are saying 75% of the PURCHASE PRICE...that is absolutely wrong and you should seek another lender right away.  Now, understand that a lender is allowed to put extra rules ON TOP of the Fannie/Freddie guidelines.  We call these extra rules "Overlays".  So when we target real estate investor friendly lenders we are really targeting lenders with no "overlays".
            • Delayed Financing - Now here's where it can get confusion but it's really TWO options here.  If you purchase a property in cash you will get EITHER:
              • - 75% of the ARV (since that is the max anyway)....OR
              • - Your entire purchase price....WHICHEVER is LOWER
            • So in this situation if you purchase very aggressively, you might be leaving some money in the property using Fannie/Freddie money.  As mentioned above, you can certainly use a commercial style loan (and there are some 30 year fixed rate commercial lenders out there) but working with a lender with no overlays on the Fannie/Freddie side is paramount

              Sometimes when I type all of this out it might still not be 100% clear so feel free to ask any questions and I'll be here to help.  Oh, and I did write an entire post on how to avoid ALL of this that you can find HERE.

              Thanks!

                 Thanks very helpful

                1Reply
              Join the conversationCreate a free account to reply, vote on answers and follow this thread.
              Log InJoin for Free