No Cash Out refi options due to Covid?

Question

Over the last few days, a couple of local banks told me they "are not currently offering cash-out refinancing on investment properties due to Covid impact concerns". Have any of you heard anything similar?

Very new to rental property investing so I'm hoping this is an isolated local/small bank issue.

Thanks in advance for your help!

Alex Bekeza · Answer

@Benjamin Seibert Much appreciated!

@Freddy Morgan A lot of small depository institutions have tightened up their risk profile quite a bit in the wake of Covid.  There are much more aggressive private lending companies whose sole business is writing real estate loans. I'd say cash out accessibility is nearly back to where things were Pre Covid on the private/commercial/portfolio side.

Elise Marquette · Answer

Yes, many small banks (and large banks! Wells Fargo, Navy Fed etc.) are not doing cash out refinances. Your best bet is to go with a direct lender. Many of the big banks do mortgages as more of a side business anyway. It's not really their forte.

Benjamin Seibert · Answer

@Freddy Morgan I haven't heard of this but smaller banks are usually on one end of the spectrum (more lenient or way less lenient). I would reach out to @Alex Bekeza he is great to work with for refinancing.

Freddy Morgan · Answer

Thanks for the information and input @Benjamin Seibert, @Elise Marquette, and @Alex Bekeza!!!

I will say that a couple of the small local banks I've spoken to at this point are willing to do a price paid for the home + verifiable rehab cost @ 85% loan. However, they will not do an appraised value loan until 180 days after purchase. Offering 4-4.5% on a 5+1 ARM 20 yr Amortization.

My preference would be to find a reputable lender to do a cash-out 30-year loan based on the value calculated by an independent appraiser. That way, I can put the difference into my next investment property at a COC ROI significantly better than sitting in equity on the initial property.

I keep looking for a direct option.

Thanks again!

No Cash Out refi options due to Covid?

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