Seasoning Periods for Limited Cash Out Refi

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Seasoning Periods for Limited Cash Out Refi

Mark Koontz
Rental Property Investor · MD · Member since 2022 · 23 posts · 10 votes

I am currently under contract on a primary residence that is in disrepair. Due to the closing deadline/home condition, I am looking to use a private lender for the purchase instead of conventional from the start. The private lender wants to be repaid in ~3 months. That would give me enough time to repair the house to meet conventional standards and force equity for the cash out LTV %. I know Fannie/Freddie changed the guidelines for a cash-out refi to 12 months, but I'm seeing something called a no cash-out refi/limited cash-out refi. If the only cash being pulled out of the house is to pay off the first lien (private lender), is there still a seasoning period? Rehab will be paid with my cash.

Also I have the option of recording a lien, or not recording a lien for the private lender. Not sure which would be better. 

PP: 400K

Rehab: 50K

ARV: 600K

Here is where I'm seeing the information -

https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-ca...

https://guide.freddiemac.com/app/guide/section/4301.4

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Clint Jusino
Dallas · Member since 2020 · 154 posts · 95 votes
2y
Quote from @Mark Koontz:

I am currently under contract on a primary residence that is in disrepair. Due to the closing deadline/home condition, I am looking to use a private lender for the purchase instead of conventional from the start. The private lender wants to be repaid in ~3 months. That would give me enough time to repair the house to meet conventional standards and force equity for the cash out LTV %. I know Fannie/Freddie changed the guidelines for a cash-out refi to 12 months, but I'm seeing something called a no cash-out refi/limited cash-out refi. If the only cash being pulled out of the house is to pay off the first lien (private lender), is there still a seasoning period? Rehab will be paid with my cash.

Also I have the option of recording a lien, or not recording a lien for the private lender. Not sure which would be better. 

PP: 400K

Rehab: 50K

ARV: 600K

Here is where I'm seeing the information -

https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-ca...

https://guide.freddiemac.com/app/guide/section/4301.4

@Mark Koontz I'm currently doing a 2 step loan at the moment and can share details on the whole process. No seasoning period. DM me for details.

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  • Clint Jusino
    Dallas · Member since 2020 · 154 posts · 95 votes
    2y
    Quote from @Mark Koontz:

    I am currently under contract on a primary residence that is in disrepair. Due to the closing deadline/home condition, I am looking to use a private lender for the purchase instead of conventional from the start. The private lender wants to be repaid in ~3 months. That would give me enough time to repair the house to meet conventional standards and force equity for the cash out LTV %. I know Fannie/Freddie changed the guidelines for a cash-out refi to 12 months, but I'm seeing something called a no cash-out refi/limited cash-out refi. If the only cash being pulled out of the house is to pay off the first lien (private lender), is there still a seasoning period? Rehab will be paid with my cash.

    Also I have the option of recording a lien, or not recording a lien for the private lender. Not sure which would be better. 

    PP: 400K

    Rehab: 50K

    ARV: 600K

    Here is where I'm seeing the information -

    https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-ca...

    https://guide.freddiemac.com/app/guide/section/4301.4

    @Mark Koontz I'm currently doing a 2 step loan at the moment and can share details on the whole process. No seasoning period. DM me for details.

    1Reply
  • Jay HurstBusiness Member
    Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
    2y
    Quote from @Mark Koontz:

    I am currently under contract on a primary residence that is in disrepair. Due to the closing deadline/home condition, I am looking to use a private lender for the purchase instead of conventional from the start. The private lender wants to be repaid in ~3 months. That would give me enough time to repair the house to meet conventional standards and force equity for the cash out LTV %. I know Fannie/Freddie changed the guidelines for a cash-out refi to 12 months, but I'm seeing something called a no cash-out refi/limited cash-out refi. If the only cash being pulled out of the house is to pay off the first lien (private lender), is there still a seasoning period? Rehab will be paid with my cash.

    Also I have the option of recording a lien, or not recording a lien for the private lender. Not sure which would be better. 

    PP: 400K

    Rehab: 50K

    ARV: 600K

    Here is where I'm seeing the information -

    https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-ca...

    https://guide.freddiemac.com/app/guide/section/4301.4

     @Mark Koontz   There is NOT a seasoning/waiting  period for rate/term (also called no cash out refinance.)   You can absolutely use the improved value to simply refinance  what you owe with no waiting period. The seasoning issue is when you want to walk away with cash. For that you have to utilize our 2-step program (as referenced  above by @Clint Jusino) or wait the 12 months for a conventional loan. 

    Hurst Real Estate, INC4.989 Reviews
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    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2y
    Quote from @Mark Koontz:

    I am currently under contract on a primary residence that is in disrepair. Due to the closing deadline/home condition, I am looking to use a private lender for the purchase instead of conventional from the start. The private lender wants to be repaid in ~3 months. That would give me enough time to repair the house to meet conventional standards and force equity for the cash out LTV %. I know Fannie/Freddie changed the guidelines for a cash-out refi to 12 months, but I'm seeing something called a no cash-out refi/limited cash-out refi. If the only cash being pulled out of the house is to pay off the first lien (private lender), is there still a seasoning period? Rehab will be paid with my cash.

    Also I have the option of recording a lien, or not recording a lien for the private lender. Not sure which would be better. 

    PP: 400K

    Rehab: 50K

    ARV: 600K

    Here is where I'm seeing the information -

    https://selling-guide.fanniemae.com/sel/b2-1.3-02/limited-ca...

    https://guide.freddiemac.com/app/guide/section/4301.4


     There is no seasoning requirement on a rate and term refinance (only paying off the private mortgage, no cash out) 

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
    0Reply
  • Jacob Sherman
    12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes
    2y

    hard money can only be used for investment unless its a departing bridge in most cases 

    0Reply
  • Anderson S.Business Member
    Lender · Brooklyn, NY · Member since 2024 · 209 posts · 50 votes
    2y

    In your situation, a no cash-out or limited cash-out refinance might be a viable option. This type of refinance allows you to pay off your private lender without taking additional cash out, potentially bypassing the 12-month seasoning period required for cash-out refinances by Fannie/Freddie. However, it's crucial to verify with the specific lender, as policies can vary.

    Regarding recording a lien, if the lien is recorded, it formalizes the debt and provides legal protection for the lender, which might be required by your private lender. Not recording a lien might make the transaction less formal but could complicate the refinance process later. It's best to discuss these options with your lender and possibly a real estate attorney to ensure you make the right decision.

    [email protected]917-830-7144
    Brooklyn Funding Group59 Reviews
    WebsiteView Page
    0Reply
  • Joseph Chiofalo
    Banker · Henderson, NV · Member since 2023 · 316 posts · 73 votes
    2y

    Hi Mark, 

    You will be able to restructure the loan within the 3 month period.  No seasoning period on a rate / term refinance. 

    0Reply
  • Logan Singleton
    Lender · Boston, MA · Member since 2023 · 415 posts · 95 votes
    2y

    We don't have a seasoning period for cashout refinances as long as the property has documented value added.

    0Reply
  • Zach Edelman
    Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
    2y

    This is an investment property for you, correct?

    0Reply
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