Here is a little trick I use as a broker to have my investors do to achieve their goal when a lender will not provide straight cash for your deal.
Some lenders out there will not give flat cash back to the client but will allow tradelines to be paid off.
this takes some reserves and tends to work for the more experienced investor.
Open a secured line of credit with a local bank (making a certain dollar amount deposit)
Many of my people can turn a rehab around in 30 to 45 days.
then I approach my lender refinancing a hard money loan and paying off a line of credit along with the private mortgage (which is always reusable and provides higher credit scores when paid off fully on a regular basis)
Keeping a $5 balence will keep it open and in use. \
Like I said this does take some capitol but this procedure opens doors to a few more lenders and keeps you in line with rules and regulations so your not constantly asking for “exceptions” (brokers know what Im talking about) on your deals all the time.
For the past couple of years I have had good success buying properties in need of repair below market (either cash or hard money), rehabbing, refinancing at 75-85% of after repaired appraised value after 90 days of property purchase. I have great credit, decent reserves and many successful transactions under my belt.
My concern is this: as the shake-ups move through the mortgage industry and with my mortgage broker telling me daily of another lender going under who is going to be my lender allowing me to cash out of these properties after successful completion of the rehab? Today, he called me to let me know that the last lender he had that would do cash out with 90 day seasoning went under today. Those of you who are cashing out of your rehabs after completion please share your thoughts on this changing environment. Who are you using to pull out your cash or pay off that hard money loan? Any help or advice will be appreciated.
Re: Cash out Refinancing & Seasoning in NC - Posted by Ben Carmona
Posted by Ben Carmona on July 31, 2007 at 16:29:39:
This is not that hard guys. I’ve been posting the same thing for almost the last 1.5 years on this site.
The lender you were scheduled to close with is American Home Mortgage (retail side) or Amercian Broker Conduit (wholesale) if using a broker. They are not going under (as of yet). The shake up is that they lost their credit lines for funding over the next couple days. Apparently they are still taking new applications and have intentions of having new credit lines going shortly. So nless you’re in a dire need to close, you may want to hang tight.
Seasoning is not an issue with conforming loans. Most any lender can do these all day long under Fannie guidelines. When you start getting over 10 properties or needing a higher ltv in combination with reduced doc loans, then you must use an ALT-A loan. The ALT-A loans are offered by those same lenders doing conforming. Seasoning requirements are typically 12 months, a handful can do at 6 months. A couple can do at 90 days, several can do with NO SEASONING up to 75% ltv and ONE CAN STILL DO WITH NO SEASONING UP TO 90%, EVEN ON REDUCED DOC.
I’ve posted this many times. Maybe the search fields arent working.
Re: Cash out Refinancing & Seasoning in NC - Posted by christopher w
Posted by christopher w on July 31, 2007 at 15:55:15:
Morgan Stanley offers a NOO no-seasoning cash-out to 80%. If all you need is a rate term refinance Greenpoint offers a NOO no-seasoning rate term refinance as does First National Bank of Arizona. Hope this helps.
I am in the same boat. I do the same thing as you and have had good luck with it but the loan and refi restrictions have been getting tighter and I was informed today that my lender, who I was scheduled for a refi with on the 9th, has just tanked.
I have been on the phone today with National City and with Prosperity Mortgage and both said that they can do a cash out refi at 3 months. It looks like I am going wo go with Prosperity Mortgage since they said that they basicly use the same products and can get National Cities rates at wholesale, whatever that means.
Hope it helps and good luck with your future dealings.