Refinancing a Seller Financed Deal - Seasoning Time

Rental Property Investor · Southwest PA · Member since 2020 · 6 posts · 1 vote

Hello Everyone!

Last October (October '21) I closed on a seller financed deal consisting of a triplex, duplex, and garage/ADU. So 6 total apartments. It needed quite a bit of work. Rehab is just about to finish with 4/6 apartments currently under lease. I reached out to my preferred bank to start planning for the refinance. I thought everything was moving forward perfectly until the bank called and said it's their policy that seller financed deals have a 2 year seasoning period. I'd prefer to use this bank since they've treated me well in the past but waiting 15 or so more months to close the refinance has me a bit disheartened.

Is a 2 year seasoning period typically required to refinance a seller financed deal?

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Upen PatelPro Member

Lender · Nationwide Lender · Member since 2015 · 1k+ posts · 814 votes

@Milton Durstine Are these on individual parcels/tax ID? This would determine the type of loan you can use.

Does each property have its individual loan? Or is it a single loan that collateralizes all the properties? This would determine if it is classified as a rate and term refi or a cash-out refi (even if you are not getting any cash in hand).

Since you have owned the property for more then 6 months you certainly should be able to do a refi. The 2 yr seasoning requirement is that lenders internal overlay.

Hope this helps.

[email protected]571-200-6180

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Dustin Allen
Real Estate Agent · South Lake Tahoe, CA · Member since 2016 · 680 posts · 644 votes
4y
@Milton Durstine
Time to start shopping. Keep taking to lenders until you find one that will do a year or less.
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Andrew Garcia
Lender · Charlotte, NC · Member since 2022 · 739 posts · 410 votes
4y
Hi @Milton Durstine, that bank is probably keeping their loans as a portfolio loan rather than selling them to Fannie/Freddie.
Therefore, they have their own guidelines. Fannie Mae and Freddie Mac have no problem refinancing a seller-financed deal.
However, you would have to wait 6 months from when you received the title of the property. Since it has been greater than 6 months, you do not have to wait.
If you refinance now and want to refinance with your preferred bank in 15 months, you can certainly do so.
If you would like a referral to a lender that can help you with this refinance, please let me know.
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Milton DurstinePro Member
OP
Rental Property Investor · Southwest PA · Member since 2020 · 6 posts · 1 vote
4y
@Andrew Garcia Thanks for reaching out and for your reply. A referral would be great. Feel free to send me a message.
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Upen PatelPro Member
Lender · Nationwide Lender · Member since 2015 · 1k+ posts · 814 votes
4y
@Milton Durstine Are these on individual parcels/tax ID? This would determine the type of loan you can use.
Does each property have its individual loan? Or is it a single loan that collateralizes all the properties? This would determine if it is classified as a rate and term refi or a cash-out refi (even if you are not getting any cash in hand).
Since you have owned the property for more then 6 months you certainly should be able to do a refi. The 2 yr seasoning requirement is that lenders internal overlay.
Hope this helps.
[email protected]571-200-6180
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Jared RineBusiness Member
Lender · Sacramento, CA · Member since 2009 · 1k+ posts · 277 votes
4y
@Milton Durstine...I second what's said by @Upen Patel ..he's asking good questions and has good points. There are lenders that should be able to refinance you with 6 months seasoning for cash out / 1 day for rate/term, depending.
Jared Rine United Lending Partners53 Reviews
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Milton DurstinePro Member
OP
Rental Property Investor · Southwest PA · Member since 2020 · 6 posts · 1 vote
4y
Quote from @Upen Patel:

@Milton Durstine Are these on individual parcels/tax ID? This would determine the type of loan you can use.
Does each property have its individual loan? Or is it a single loan that collateralizes all the properties? This would determine if it is classified as a rate and term refi or a cash-out refi (even if you are not getting any cash in hand).
Since you have owned the property for more then 6 months you certainly should be able to do a refi. The 2 yr seasoning requirement is that lenders internal overlay.
Hope this helps.

@Upen Patel Thanks for response. They are all on the same parcel/tax ID with a single loan for all the properties.

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Upen PatelPro Member
Lender · Nationwide Lender · Member since 2015 · 1k+ posts · 814 votes
4y
Quote from @Milton Durstine:

Quote from @Upen Patel:

@Milton Durstine Are these on individual parcels/tax ID? This would determine the type of loan you can use.
Does each property have its individual loan? Or is it a single loan that collateralizes all the properties? This would determine if it is classified as a rate and term refi or a cash-out refi (even if you are not getting any cash in hand).
Since you have owned the property for more then 6 months you certainly should be able to do a refi. The 2 yr seasoning requirement is that lenders internal overlay.
Hope this helps.

@Upen Patel Thanks for response. They are all on the same parcel/tax ID with a single loan for all the properties.

That would make it a commercial loan.
[email protected]571-200-6180
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Bill Ham
Member since 2020 · 19 posts · 29 votes
4y
18 months is standard but the market may be tightening going forward.
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