Quote from @Franklin D.:
Quote from @Stephanie P.:
Quote from @Franklin D.:
Jackson,
I just asked my loan broker about this today. You should find one in your area (more than one) and ask them.
According to mine if it is 100% your cash you can cash out refinance at any point. If you borrow any amount from say a family member you have to wait 6 months. Take what I said with a grain of salt. There is very little information on this and when I called multiple lenders/brokers some of them didn't even know about the extension to 12 months.
-Frank
Frank,
Welcome to BP
If your broker told you "it is 100% your cash and you can cash out refinance at any point" do yourself a favor and find a new one because that statement is woefully incomplete. There is a ton of that information out there and easily found with a quick Google search about cash out refinance. An entire segment of the industry has grown up as a foil to conventional guidelines, so to say there is very little information on this is just amazing to me. To correct your broker, just because it's "your cash" doesn't mean a bank/lender/broker has to lend you theirs. The correct statement would be 'If you pay cash for a property, if you credit qualify, you can finance a loan using the purchase price as the value, up to (whatever loan to value they're willing to give you) without seasoning.' https://singlefamily.fanniemae...I've linked to the Fannie Mae eligibility matrix to see the max loan to value percentages. You won't get 100% of what you paid back out and they won't use the appraised value for conventional financing until 12 months have gone by. Here's the .guideline from the Fannie Mae seller's guide.https://selling-guide.fanniema...
Thank you for the reply. That was definitely a blanket statement now that i look at it. What I meant about there being very little information is that I have not seen many people talking about the seasoning requirements going from 6 months to 12 months on a property purchased with a loan and then cash out refinanced. I also was assuming people knew that no one
had to give them a loan. I also assumed the BRRRR method was being correctly used and they were generating equity over what they spent to obtain an LTV appropriate to bring all their cash out.
Your second link has a condition
"The above ownership policy applies in addition to the requirement that an existing first mortgage being paid off through the refinance is at least 12 months old." With the all cash method would there have been an existing mortgage?
In another Fannie Mae guide with a section specifically about "
Cash-out refinance Mortgage on a property owned free and clear" I found
"At least one Borrower must have been on the title to the subject property for at least six months prior to the Note Date"
I am really glad that professionals like you take your time to answer and correct questions/answers on these forums. It makes navigating these conditions and changes much easier. Thank you for your time.
Regarding your question about the all cash method, no, there actually can't have been a mortgage to get all cash. The process would be purchase with cash for speed to get the deal and then finance the property using the purchase price to get the bulk of your money back out.
You have to read the whole section about cash out refinances to get it. At the beginning of the first paragraph, the title "Eligibility Requirements" spells out the basis for eligibility. At the end of the section defining Ownership of the Property, it says "The above ownership policy applies in addition to the requirement that an existing first mortgage being paid off through the refinance is at least 12 months old.
The part you're asking about deals with exceptions.
"At least one borrower must have been on title to the subject property for at least six months prior to the disbursement date of the new loan, unless one of the following exceptions apply:"
- There is no waiting period if the lender documents that the borrower acquired the property through an inheritance or was legally awarded the property (divorce, separation, or dissolution of a domestic partnership).
- The delayed financing requirements are met. See Delayed Financing Exception below.
- If the property was owned prior to closing by a limited liability corporation (LLC) that is majority-owned or controlled by the borrower(s), the time it was held by the LLC may be counted towards meeting the borrower's six-month ownership requirement. (In order to close the refinance transaction, ownership must be transferred out of the LLC and into the name of the individual borrower(s). See B2-2-01, General Borrower Eligibility Requirements for additional details.)
- If the property was owned prior to closing by an inter vivos revocable trust, the time held by the trust may be counted towards meeting the borrower’s six-month ownership requirement if the borrower is the primary beneficiary of the trust.
The above ownership policy applies in addition to the requirement that an existing first mortgage being paid off through the refinance is at least 12 months old.
