How to get a cash-out refinance on a newly purchased property?

May 22, 2009 7:44 PM

Stupid-mortgage-company-filter. Is it possible to get a cash-out refinance on an investment property without going through the 6-12 month seasoning process?

We're scheduled to close on a property this Tuesday. The mortgage fell through at the last minute because of a combination of crazy new lender rules and bureaucratic incompetence. Luckily, we can pay cash, but we need to replace that cash immediately to rehab the house. Immediately = within a few weeks. Every lender and broker I've spoken to says that everyone is now following Fannie Mae's guidelines, which require 6 months of seasoning (being on title) for a primary residence and 12 months of seasoning for an investment property. Some lenders say "it's possible that some lenders won't have to follow the Fannie guidelines" and can give us a refi faster. I have called a bunch of lenders and these remain mythical so far.

What kind of lenders might be in a position to give no-seasoning loans? We are willing to pay a somewhat higher interest rate because the loan is not huge.

We're also open to creative alternative suggestions for financing the rehab. Incidentally, the seller is being completely intransigent and postponing the closing date is not an option, but it's a great deal and we want the house. Thanks for any help!!!!

posted by walla to work & money (4 comments total)

I would look over at The Broker Outpost's broker forums. It's largely brokers discussing who will do what kind of deals. I think you're supposed to register or pay or something for search functionality, but Google's got you covered.

May take some sifting to find a scenario that matches yours but someone is bound to have asked.
posted by EmptyK at 8:26 PM on May 22

It is possible if you found the right lender. Look for new lenders who are desperate to do business.
Find a broker who does a lot of flipping. They are always looking for new lenders who are willing to step up to the plate and bend over.
posted by kapu at 4:15 AM on May 23

If you're paying cash, couldn't you apply for a HELOC to cover the rehab costs?
posted by Sweetie Darling at 11:24 AM on May 23

Sweetie Darling - that was my first thought, so I think it's a good one :-) Unfortunately, HELOCs on investment properties are apparently now non-existent. I'm trying to look at this in a positive light, i.e. if all this were easy right now the deals would not be so good, but it's hard not to get frustrated when every sensible financing option seems to have evaporated in the past year or so.
posted by walla at 3:19 PM on May 23