Best cash out refinance lenders?

Question

Hello, RE friends! Wanted to see if anyone has insight into the best long term cash out refinance programs right now? Best rate? Highest LTV? Lowest fees? I’m refinancing 2 BRRRR rehabs in Illinois. Thanks!!

Brittany Minocchi · Answer

How long have you owned them? Conventional refis require 12 months of seasoning now, so many investors are using DSCR loans. Rate, LTV, fees, min loan amount/property value and seasoning requirement will vary by lender. To give an idea though - 75% LTV is pretty common and most (not all) lenders want to see 6 months of seasoning to use apprised value. For term, 30 year fixed and ARMs are available. Consider the prepayment penalty too, they're usually up to 5 years but many lenders give you the option to buy it down or out completely in exchange for a higher rate. I know of at least one lender doing up to 80% LTV with no seasoning requirement as long as rehab was completed for qualified borrowers. The lenders with the more flexible guidelines (allow a lower FICO, higher LTV, less seasoning, etc) tend to have higher rates than the lenders with more strict guidelines.

Hope that helps, feel free to connect if you think of any other questions :)

AJ Exner · Answer

Hey Sarah,

Yeah, “best” is actually kind of subjective. @Brittany Minocchi kind of hit on a few of the implications that lenders are looking, not to mention the amount on the loan itself as many lenders have minimum loan amounts.

The best way to do it is to prioritize what YOU value the most and find the lender that also meets your needs. Rate, leverage, fees, speed, document requirements are all things that you need to think through and then find a lender that matches what you need.

I hope that helps, happy to assist in finding one if you need some personal recommendations.

Amit Patel · Answer

Congrats on getting two through the rehab! Rates change too fast to name a “best” lender, but here’s what I’ve seen work for our owners:

• Compare DSCR lenders and conventional. DSCR qualifies on the property’s rent, not your income, which helps as you scale. Conventional usually wins on rate if you still have room in your DTI.
• Ask about seasoning first. Some lenders want 6 to 12 months of ownership before they’ll use the new appraised value. That can matter more than the rate.
• Expect most cash-out programs to top out around 70 to 75% LTV on investment properties.
• Watch the fine print: points, origination fees, and prepayment penalties, especially on DSCR loans. Compare the full cost, not just the rate.
• Call a couple of local banks and credit unions too. Their portfolio loans are sometimes more flexible than the big lenders.

Compare DSCR lenders and conventional. DSCR qualifies on the property’s rent, not your income, which helps as you scale. Conventional usually wins on rate if you still have room in your DTI.

Ask about seasoning first. Some lenders want 6 to 12 months of ownership before they’ll use the new appraised value. That can matter more than the rate.

Expect most cash-out programs to top out around 70 to 75% LTV on investment properties.

Watch the fine print: points, origination fees, and prepayment penalties, especially on DSCR loans. Compare the full cost, not just the rate.

Call a couple of local banks and credit unions too. Their portfolio loans are sometimes more flexible than the big lenders.

One tip for the appraisal: have both units leased with signed leases, and hand the appraiser your scope of work with before and after photos. It makes a real difference in the value you get.

Erik Estrada · Answer

Hi Sarah,

Right now you can anticipate up to 80 LTV on a cash-out, 85% LTV on both rate and term and purchase transactions. Rates and fees are highly dependent on how the loan is structured but generally you can see rates in the 7s for the time being and loan fees being structured based on the rate and loan size.

Jacob Sherman · Answer

How long have you owned them for ?

Derek Brickley · Answer

As already mentioned it definitely depends the specific scenario! If we might be able to help, feel free to reach out!

Robin Simon · Answer

Hi - plenty of good lenders out there, I'd recommend searching here on BiggerPockets and looking at reviews. Also sharing an article I published on BP last year on this exact topic - all the options for BRRRR Loans (Including the all-important cash-out refi) and pros/cons

https://www.biggerpockets.com/blog/brrrr-loans-what-are-the-...

Generally - DSCR Lenders will be best for LTV and speed (70%/75% generally 6 months, but some can do 3), while conventional will have lower rates/fees. However, since April last year, the seasoning period for conventional is now 12 months which really counteracts the rate/fee benefits for most BRRRR method investors

Sarah Stapp · Answer

Thanks for the intel, everyone!

Best cash out refinance lenders?

Best cash out refinance lenders?

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