New Seasoning rules for cash buys?

Question

Hi all,

I have been using a credit line to purchase properties in cash. This gives me better leverage to negotiate with the seller. Then I refinance on the other side after Iv done repairs.

Recently, I spoke with my lender and they said that if I wanted to refinance, I had to wait for a YEAR before I refinance into a conventional loan. They have another loan (5/1 ARM) that I can use in the meantime, but the rate is awful.

Remember - I bought the property cash. I thought seasoning didn’t apply unless I purchased the original property with a loan, but I guess that’s not true?

Do cash bought homes also have to season for a year before I can finance my cash out?

Yikes

Timothy Hero · Answer

Conventional is always more strict. My lenders are DSCR lenders and that side is much easier. 3 month seasoning if there's a lien and 6 months if you paid cash, but you can start the process at 5 months.

Stephanie P. · Answer

For cash out and conventional financing, you have to wait a year.  You can refinance using the purchase price as your value right away (most people want to use the cash for another purchase though).

DSCR minimum right now is 3 months, but for best pricing, use 6 months as your guide.

Robin Simon · Answer

Yes - DSCR lenders are ready and able to fill the BRRRR void with the conventional rule change

Jay Hurst · Answer

@David B.   What state do you borrow in?

Erik Estrada · Answer

If you want to refinance based on the ARV, you can do 75% LTV on a cash out refinance with 90 days seasoning. If you want to recoup the purchase price and repairs, you can do a delayed finance with no seasoning requirement.

Josh Young · Answer

@David B.

I would talk to a mortgage broker, I have heard the seasoning requirements only apply to cash out conventional, so you can do a cash out refi with a different loan product (non conventional) just make sure there is no prepayment penalty and then immediately refinance that loan into a conventional loan, the seasoning period won’t apply to the conventional refinance because it will just be a rate and term refi, not a cash out.

Mark Fein · Answer

It used to be six months seasoning, but guidelines for conventional loan-cash out changed recently.  It's now 12 months.

New Seasoning rules for cash buys?

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