Need refinancing options

[Larry Russell]

I've recently purchased a condo with all cash and looking for refinance options. The condo is in my business name which creates an additional complexity to the situation. Can anyone recommend a commercial bank that lends to real estate investors? I have good credit, so I have no problem with obtaining financing personally, but so far most banks say I have to wait 6 months before they're able to refinance.

Any suggestions or recommendations on who I can turn to for a commercial loan?

[Robert Leonard]

@Larry Russell I would look for smaller regional banks or credit unions for better seasoning expectations.  Their seasoning requirements (the amount of time they expect you to own a property before you can cash out refinance) will be anywhere from zero to 1 year.  The only way you know is if you ask.  Condos usually only get 75% financing as opposed to the 80% other types of properties usually get, from what I've read (not personal experience).

Something I recommend before you go and visit these banks/credit unions is that you go to www.memphisinvest.com and for the price of your name and email address, you'll get access to Chris Clothier's video tutorial on how to create a "bank book."  If you do that, you will put yourself head and shoulders above others when you offer them your business while others walk into banks asking to borrow money.  Be prepared to take notes while watching the video, the information is gold!

DISCLOSURE:  I have no affiliation to memphisinvest or Chris Clothier.  I simply find this free information very valuable.

[Shaun Weekes]

Hello Larry,

If you're looking for conventional financing most likely you would qualify for delayed financing which is available when you have only had the home for 6 months or less.  However most banks will require you to finance this home in your name and not your companies name. 

Here is the delayed financing guideline from Fannie Mae's website:

Delayed Financing Exception

Borrowers who purchased the subject property within the past six months (measured      from the date on which the property was purchased to the disbursement date of the      new mortgage loan) are eligible for a cash-out refinance if all of the following requirements      are met.  

?	Requirements for a Delayed Financing Exception
The original purchase transaction was an arms-length transaction.
For this refinance transaction, the borrower(s) must meet Fannie Mae’s borrower eligibility                  requirements as described in B2-2-01, General Borrower Eligibility Requirements. The borrower(s) may have initially purchased the property as one of the following:                  a natural person; an eligible inter vivos revocable trust, when the borrower is both the individual establishing the trust                           and the beneficiary of the trust;                        an eligible land trust when the borrower is the beneficiary of the land trust; or an LLC or partnership in which the borrower(s) have an individual or joint ownership of 100%.
The original purchase transaction is documented by a HUD-1 Settlement Statement, which                  confirms that no mortgage financing was used to obtain the subject property. (A recorded                  trustee's deed [or similar alternative] confirming the amount paid by the grantee                  to trustee may be substituted for a HUD-1 if a HUD-1 was not provided to the purchaser                  at time of sale.)                  The preliminary title search or report must confirm that there are no existing liens                     on the subject property.
The sources of funds for the purchase transaction are documented (such as bank statements,                     personal loan documents, or a HELOC on another property).
If the source of funds used to acquire the property was an unsecured loan or a loan                  secured by an asset other than the subject property (such as a HELOC secured by another                  property), the HUD-1 for the refinance transaction must reflect that all cash-out                  proceeds be used to pay off or pay down, as applicable, the loan used to purchase                  the property. Any payments on the balance remaining from the original loan must be                  included in the debt-to-income ratio calculation for the refinance transaction.                  Note: Funds received as gifts and used to purchase the property may not be reimbursed                        with proceeds of the new mortgage loan.
The new loan amount can be no more than the actual documented amount of the borrower's                     initial investment in purchasing the property plus the financing of closing costs,                     prepaid fees, and points on the new mortgage loan (subject to the maximum LTV/CLTV/HCLTV                     ratios for the cash-out transaction based on the current appraised value).
All other cash-out refinance eligibility requirements are met with the exception of                  continuity of obligation, which need not be applied. Cash-out pricing is applicable.

I hope this helps and if you have any more questions I'm here to help Sir.

[Shaun Weekes]

Hello Larry,

If you're looking for conventional financing most likely you would qualify for delayed financing which is available when you have only had the home for 6 months or less.  However most banks will require you to finance this home in your name and not your companies name. 

Here is the delayed financing guideline from Fannie Mae's website:

Delayed Financing Exception

Borrowers who purchased the subject property within the past six months (measured      from the date on which the property was purchased to the disbursement date of the      new mortgage loan) are eligible for a cash-out refinance if all of the following requirements      are met.  

?	Requirements for a Delayed Financing Exception
The original purchase transaction was an arms-length transaction.
For this refinance transaction, the borrower(s) must meet Fannie Mae’s borrower eligibility                  requirements as described in B2-2-01, General Borrower Eligibility Requirements. The borrower(s) may have initially purchased the property as one of the following:                  a natural person; an eligible inter vivos revocable trust, when the borrower is both the individual establishing the trust                           and the beneficiary of the trust;                        an eligible land trust when the borrower is the beneficiary of the land trust; or an LLC or partnership in which the borrower(s) have an individual or joint ownership of 100%.
The original purchase transaction is documented by a HUD-1 Settlement Statement, which                  confirms that no mortgage financing was used to obtain the subject property. (A recorded                  trustee's deed [or similar alternative] confirming the amount paid by the grantee                  to trustee may be substituted for a HUD-1 if a HUD-1 was not provided to the purchaser                  at time of sale.)                  The preliminary title search or report must confirm that there are no existing liens                     on the subject property.
The sources of funds for the purchase transaction are documented (such as bank statements,                     personal loan documents, or a HELOC on another property).
If the source of funds used to acquire the property was an unsecured loan or a loan                  secured by an asset other than the subject property (such as a HELOC secured by another                  property), the HUD-1 for the refinance transaction must reflect that all cash-out                  proceeds be used to pay off or pay down, as applicable, the loan used to purchase                  the property. Any payments on the balance remaining from the original loan must be                  included in the debt-to-income ratio calculation for the refinance transaction.                  Note: Funds received as gifts and used to purchase the property may not be reimbursed                        with proceeds of the new mortgage loan.
The new loan amount can be no more than the actual documented amount of the borrower's                     initial investment in purchasing the property plus the financing of closing costs,                     prepaid fees, and points on the new mortgage loan (subject to the maximum LTV/CLTV/HCLTV                     ratios for the cash-out transaction based on the current appraised value).
All other cash-out refinance eligibility requirements are met with the exception of                  continuity of obligation, which need not be applied. Cash-out pricing is applicable.

I hope this helps and if you have any more questions I'm here to help Sir.

[Shaun Weekes]

Sorry about the copy and paste as it came out looking horrible.  I hope it still all makes sense :)