How quickly can you refi after closing?

We may have an opportunity to by a below market property quickly all cash. The money would be provided by a private lender. We would then look to refinance as soon as possible, within 2 months etc. Note, we are using our existing equity (cash) for a renovation and thus would not want to tie it up if possible in the below market property. Potentially risky – perhaps. But is it possible? What lenders should we look to use? Thanks in advance.

crownheights2013

in About Brooklyn 11 years and 9 months ago

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vthatcher | 11 years and 9 months ago

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This is a little risky only due to the fact that there is private money involved. If you bought it cash- you can refi it right away- no seasoning- as long as you can prove you bought it with your own money. But remember your refi and loan limits is based on what you paid for the property and not what its worth. Meaning if you paid 500k and its worth 700k- the bank will cap the value at the sales price. Why not just finance the purchase? The process is 2-3 weeks as long as your attorney orders title right away… Vanessa Thatcher Senior Loan Officer NMLS# 41404 Atlantic Home Capital 4175 Veterans Memorial Hwy, Ste 310 Ronkonkoma, NY 11779 Office: 631-687-3510 x106 Direct Dial: 631-468-8809 Direct Fax: 631-918-5222 Cell: 631-672-4113 “Pennies don’t fall from heaven; they have to be earned here on earth” ~Margaret Thatcher~ Website: www.atlantichomecapital.com You can catch me in the directory at www.Brownstoner.com www.montauk-online.com http://brickunderground.com/directory/listing/guide/mortgages NEW SITE http://www.bktothefullest.com

vthatcher | 11 years and 9 months ago

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This is a little risky only due to the fact that there is private money involved. If you bought it cash- you can refi it right away- no seasoning- as long as you can prove you bought it with your own money. But remember your refi and loan limits is based on what you paid for the preoperty and not what its worth. Meaning if you paid 500k and its worth 700k- the bank will cap the value at the sales price. Why not just finance the purchase? The process is 2-3 weeks as long as your attorney orders title right away… Vanessa Thatcher Senior Loan Officer NMLS# 41404 Atlantic Home Capital 4175 Veterans Memorial Hwy, Ste 310 Ronkonkoma, NY 11779 Office: 631-687-3510 x106 Direct Dial: 631-468-8809 Direct Fax: 631-918-5222 Cell: 631-672-4113 “Pennies don’t fall from heaven; they have to be earned here on earth” ~Margaret Thatcher~ Website: www.atlantichomecapital.com You can catch me in the directory at www.Brownstoner.com www.montauk-online.com http://brickunderground.com/directory/listing/guide/mortgages NEW SITE http://www.bktothefullest.com

mortgagepro | 11 years and 9 months ago

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Patrick, thank you for clarifying my rambling post. I wish there was an edit option here as at times I hit submit too fast! Indeed, the secured lien will support the rate/term scenario. At times there are cash buyers who will pay cash for the purchase and then subsequently look to recoup their liquidity with a refinance, which then would be subject to cash out guidelines. I am hearing (rumors) about private money lender(s) willing to offer financing amounts higher than what a Conventional and Jumbo Rate/Term refinance will allow and that can be problematic where the borrower needs to be prepared to come to the table with the additional assets to qualify for the refi and satisfy the private lien. While it may just be rumor, the Underwriter mindset in me does get very nervous as the borrower must make sure they have a feasible end game to get away from any high rate private money. -Adam Adam Roberts South Shore Mortgage NMLS#1310 P: 631-956-0111 x218 F: 631-956-0123 adamr@fast2fund.com

patrick | 11 years and 9 months ago

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The best way to handle your transaction is to be sure to have your private lender secure the mortgage with a lien against your property. With a secured lien, your refinance should be considered a non cash-out refinance which should mean that you can refinance immediately. If you intend to take additional cash-out above the amount that you borrow from the private lender, then you will need to show evidence of receipts for the materials and labor that you paid for the property improvements. By showing this information, the lender should be able to recognize the new, improved value instead of the value based upon your purchase price. Patrick Lavell NMLS#179233 Liberty Home Funding, Inc. (212)838-9115

mortgagepro | 11 years and 9 months ago

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crownheights2013, we know each other but I wanted to publicly post a reply as your question is one that is asked on occasion. The answer depends on a variety of factors. First evaluate whether or not the private mortgage has any prepayment penalty. If so, that needs to be taken into account when determining the payoff. You can always refinance an existing mortgage at any time after the purchase, however, keep in mind that lending guidelines vary in respect to the ‘seasoning’ requirement as to when the lender will base the Loan To Value (LTV) on the current appraised value. Most lenders will look for 12 months from acquisition to utilize the current appraised value of a property. In some cases, where there was a significant renovation, some lenders will accept that documentation to warrant using the appraised value prior to the property meeting their general seasoning requirements. There are a few portfolio lenders who do not have a seasoning requirement, which can be useful. However, keep in mind that all other product guidelines must be met as well. For example, in most cases lenders will view this as a cashout refinance, so lower Loan To Value limits will be applicable. In some cases, where there is a refi promptly after a purchase some would call it a ‘technical refi’, however, that interpretation has dwindled over the years and most want to underwrite it as a cashout refi. That being said, keep in mind that even if a lender will accept the appraised value, depending on the property type, loan amount, and occupancy, you will be limited to those Loan To values (LTV) when refinancing. (i.e. many lenders do not do cash out refinances on investment property) Each scenario is truly unique and needs to be evaluated. Adam Roberts South Shore Mortgage P: 631-956-0111 x218 F: 631-956-0123 adamr@fast2fund.com