Purchasing in cash ; immediately getting an adjustable rate loan; then refi'ing that loan down the line

[Westin Hudnall]

hello geniuses :

I have been purchasing buy and hold properties with a line of credit then immediately after rehab get a cash out refi for 75% of the appraisal value. The loan is an adjustable rate loan which is fine temporarily but not for the long haul for a buy and hold portfolio. I have owned these loans over 6 months ; some over 1 year and would like to refinance them to permanent fixed 30 year terms :

I would like to know how the amount I will get is determined and what are the terms 

Thanks :)

[Albert Bui]

@Westin Hudnall 

You can refinance those lines of credit into a conventional 30 year (non cash out) immediately right after acquisition if the line of credit was used to obtain the property. If the line of credit was obtained after the property was purchased paying it off might be considered a cash out which has strict requirements. It all depends on when the line of credit was obtained on the property.

Paying off non purchase money 2nd's and loans can be considered a cash out with conventional financing and not with other types of financing like portfolio/community/local lenders and etc. Hopefully that is clear (if you're using conventional as opposed to local bank of kansas etc). Guidelines can vary but the above is for conventional.

You can cash out up to 70% of market value up till you recover all of your acquisition and closing costs if you cash out under 6 months after a cash purchase (no other liens on the property or lines of credit).

If you cash out after 6 months you can go up to 75% off the lower of purchase price or market value

If you cash out after 12 months its based on market value - 

Its important to make a clear distinction on what constitutes a cash out refinance or a rate/term refinance (regular refinance with less than 2k back to borrower at close). The R/T refinance can be done at anytime.

In you case if you acquired the line of credit after I believe your situation would be classified as a cash out refinance and subject to the time frame and LTV rules above.

Hope that helps.