Posted by Ben Carmona on December 13, 2006 at 21:55:40:
We should discuss rates off line. I dont want other investors to be confused as to what’s available.
Ben
No seasoning cash out refinance – help! - Posted by Kazi
Posted by Kazi on December 11, 2006 at 14:53:30:
I am making an offer on an REO property that needs minor repair (5k-7k). My goal is to fix it up and rent it out as a lease purchase. My plan is to get a 100% financing loan from a traditional bank, and then fix this place up with money from private sources. Once it is fixed up in a few weeks or so, I want to get the repair cost back by doing a 80% no seasoning cash out refinance (80% should cover everything). This will be beneficial because interest rate on refinace is quite a bit lower than the initial 100% financing. My mortgage guy says this could be done. However because this is my(newbie) first time planning to use this strategy, I am not sure if there are other better ways to do this or if I am missing something. I don’t want to use hard money lender because of the excessive points they charge. What would be a better way to do it? Please help me out with this.
Thanks,
kazi
Re: No seasoning cash out refinance – help! - Posted by Ben Carmona
Posted by Ben Carmona on December 13, 2006 at 16:59:46:
Kazi…
There ARE “no seasoning” lenders available. Many brokers choose not to take the time to understand lending guidelines, thus they’re always misdirecting their clients.
This will really depend on what your score is and what income documentation is used.
For a full doc loan 80% should be just fine. This is run through an automated underwriting engine and would have the best rates based upon a Fannie Mae loan product. Almost any lender can do this if your score is high enough.
For best rates on a stated income loan you get 75% first mortgage. Anything additional over that would need to come from a 2nd mortgage.
If your score is not high enough there are several portfilio lenders that can do cash out immediately as well. These will have a bit higher rates that the convenitional produts but still should allow for cash flow.
Then there are subprime lenders that make loans for credit challenged borrowers. A credit score under 620 would probably fit into this category. The majority of those lenders are all 12 months with a few being at 6 months.
Ben Carmona
Re: No seasoning cash out refinance – help! - Posted by Luke
Posted by Luke on December 11, 2006 at 16:29:59:
Most lenders require 1 year of seasoning before they do a cash out refi. I don’t know any lenders that allow it to be done in a shorter time period but then again I haven’t really looked for them.
I guess the question you should be asking is “are there any lenders who allow cash out refi’s in a shorter time frame”.
Re: No seasoning cash out refinance – help! - Posted by Kazi
Posted by Kazi on December 13, 2006 at 21:01:12:
Ben,
Thanks very much! This is exactly the information I was looking for. According to my broker, I could get a 80% no seasoning cash out 30 year fixed Fannie Mae refi loan right now at 6.75%.
Kazi
Re: No seasoning cash out refinance – help! - Posted by Kazi
Posted by Kazi on December 11, 2006 at 17:54:38:
From what I have been told, Fannie Mae does not require any seasoning. I guess I need to verify it from more than one mortgage broker.
Re: No seasoning cash out refinance – help! - Posted by EricM
Posted by EricM on December 11, 2006 at 17:30:45:
Most are 12 months, but there is a handful that will do it at 6 months.
Most of the no seasoning programs were dropped by lenders several months ago because of the amount defaults & fraud with these types of loans.
Re: No seasoning cash out refinance – help! - Posted by Ben Carmona
Posted by Ben Carmona on December 13, 2006 at 21:12:31:
Kazi,
I dont know all the details about your loan but I would say that you should be getting a much lower rate. Especially since you plan to hold this loan and property long term. If you dont plan to hold past 5 years then you should be looking at an adjustable rate mortgage.
Email with example of loan options to follow.
Ben Carmona
Re: No seasoning cash out refinance – help! - Posted by Kazi
Posted by Kazi on December 13, 2006 at 21:35:39:
Ben,
Thanks for all the information. I really appreciate it. I don’t plan to hold long term, but as with most lease options, tenants don’t frequently exercise their options. So I may end up becoming a long term landlord. What would you say the rate and approximate closing cost would be for a 80% refi amount $120k (ARV $150K) and credit score ~800. Does the rate change with the loan amount?
Thanks again.
Kazi