Bonaire, GA · Member since 2008 · 20 posts · 0 votes
Hi all! I am thinking of borrowing against my investment account to purchase a rental outright. I would be able to get a better deal with an offer being submitted as an all cash offer. I plan to fix it up and then rent it out. Once rented I need to know my options for getting my cash out and keeping it as a rental. I can't call it a cash out refi because there will never be a mortgage. Can I just walk into the bank and tell them that I have a house that I want to put a mortgage on? The amount I would pay is a lot less than the market value, so I am not worried about the appraised value. I just need to know is it simple and what is the process called (if it has a name). Thank you in advance for your responses!!
Real Estate Agent · Naperville, IL · Member since 2013 · 402 posts · 177 votes
9y
@Kellen M This is a "cash out refinance". If you don't have a mortgage on the home, and you went to the bank to refinance, you say you want to do a "cash out refinance" to..... pull your cash out. Have you thought about just leaving more in the investment account, and only pulling out enough for the 20-25% down payment required? Does the deal cash flow by running the number this way?
Real Estate Agent · Naperville, IL · Member since 2013 · 402 posts · 177 votes
9y
@Kellen M This is a "cash out refinance". If you don't have a mortgage on the home, and you went to the bank to refinance, you say you want to do a "cash out refinance" to..... pull your cash out. Have you thought about just leaving more in the investment account, and only pulling out enough for the 20-25% down payment required? Does the deal cash flow by running the number this way?
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
9y
it's the same thing. You're putting a mortgage on the property and cashing out against the property value. Whether or not there is a mortgage on it currently is largely irrelevant.
make sure you know of about your lenders seasoning requirements and if they do delayed financing, which might be beneficial.
Bonaire, GA · Member since 2008 · 20 posts · 0 votes
9y
Thank you for your response! I just thought if I go in as an all cash offer I would get a better deal. How long do I have to wait to go back and do a cash out refi?
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
9y
you may get a better deal by paying cash, but not likely. cash offers you (and the seller) the benefit of speed and less complication which is certainly desirable. Closing with cash is definitely the way to go even if it doesn't leverage a reduced price.
talk to the lender before you buy so you understand their closing requirements. everyone has different programs so asking the forums won't be very helpful. 6 months is an average seasoning period but you may be able to close sooner. you'll need to know how they set the loan value and other details.
I suggest you pull out as much as possible to lock in low rates while you still can ;) good luck, talk to your lender asap.
Lender · Costa Mesa, CA · Member since 2017 · 51 posts · 19 votes
9y
@Kellen M Alexander is exactly right. Here's what you do, assuming the property is FNMA lendable/eligible and you are eligible for a conventional Fannie Mae loan. -- You buy the property in cash to get the reduction in price. You will need a copy of the closing statement to prove it was an all cash purchase and then you will also need to document the source of the funds used to purchase the property in order to prove none of the money was gifted and that it was all your money. You then call a lender like myself or another bank to refinance the property. We can lend up to 70% of the MARKET value of the property (so not the price you paid, but the value based on a 3rd party appraisal), assuming 70% of the market value is not greater than the actual purchase price. The loan MUST close within 6 months of you purchasing the property. This is all required in order the meet the delayed financing Fannie Mae exception that Alex mentioned.
New to Real Estate · Bonaire, GA · Member since 2017 · 34 posts · 6 votes
7y
Hey @Kellen M I know this is off subject but I notice your an investor in Bonaire, Ga and I am also an investor in the area and I wanted to reach out and ask if you know of any RIAA Groups or meet ups in the area? Thanks for your time!