Refinacing a free and clear property/Seasoning Requirements

[Deandre P.]

Hello All,

Hoping someone may be able to provide some information.  I have a property that I am currently in the process of preparing. The deed was transffered to me a few weeks ago, it was a family property that was sitting vacant. The funds used to fix up the property came from a personal loan that I took out.  Originally, I was going to reifnace and take cash out to pay off the persoanl loan, however I have sopken to a few lenders and they mentioned I would need to be on the deed for 6 to 12 months before I could refinance.  I am needing to refiance this personal loan as soon as possible becuase the interest rate is fairly high.  Does anyone know any way around the six month seasoning requriement? Is this typical for all lenders? etc.  Any input would be greatly appreciated.

[Andrew Postell]

@Deandre P. first, I hope everything is ok in your part of town.  Up here in Dallas we didn't get much rain at all but we are rooting for Houston to recover quickly.

Second, I wish we would have met before your received this property.  There is a proper way to structure a deal like this but I can still give you some advice now.  That 6 month rule thing is a "conventional" loan rule.  Conventional loans are governed by Fannie Mae and Freddie Mac (if you recognize those names).  The bank's don't even have a say on how these loans can be approved because it's not their money - it's Fannie and Freddie money.  Conventional loans are offered by nearly every bank and sometimes they are the only loans a bank may offer....but there are other loan types.  For simplicity I will refer to this other loan type as a "portfolio" loan.  A portfolio loan comes from the bank's OWN money...their own portfolio of money if you will.  Now some bank's might still have those seasoning requirement but many don't.  To find a good portfolio loan you absolutely cannot go to a national lender.  The big banks have portfolio loans but the average person has no access to them (Chase requires you to have $250k in their bank to even see their options).  So what most investors do is we look for the smaller banks.  Maybe even a community bank.  If you haven't heard of the bank...that's a good sign! 

Now, this will require a lot of phone calls for you to make.  And it will also require some patience too.  And in full disclosure the rates will be higher for these loan types...but if you really need out of that personal loan then it might be the right route for your to take.

I hope this wasn't too much information but if you need more information then ask away!  Thanks!