No more cash-out refis for investment properties?

Question

My mortgage broker told me it's nearly impossible to find a traditional lender that will do cash-out refis for investment properties right now. With COVID-19, banks have too much uncertainty around future home values and are worried about home values declining. So many of them have stopped writing cash-out refi deals on investment properties.

Does anyone have any insight on this?! Tried to do a cash-out refi and denied? Approved? Etc?

Does anyone have any insight on this?! Tried to do a cash-out refi and denied?  Approved?  Etc?

Kody Thompson · Answer

Two options here.

1. Find a portfolio lender. Usually a small credit union

2. Wait until after the election to Refi.

Stephanie Delaurier · Answer

@Jason T. I just finished one on my primary residence and just got approved for my investment duplex with two different lenders.  It’s still happening.

Stephanie Medellin · Answer

@Jason T.  That's just not true.  Cash out refinances on investment properties (conventional loans) did not go away.  There are still plenty of lenders offering cash out.

Charles Situ · Answer

@Jason T. You are definitely seeing a bifurcation between primary residence (at or below 3% for 30 year) and much higher rates (4% or higher) and stricter standards investor-owned from traditional lenders. For Cash-out you just have to look harder. I probably made 4 phone calls before I found a lender that can do it. Lenders are a bit more cautious about potential tenant issues since Covid/lockdown. For example normally the difference between straight refi no Cash-out on invested owned and a cash out used to be about 50bps. Now it's almost a whole 1%. The one lender that was willing to do cash out quoted me at 4% no cash out and 5% cash out with no points. At the LLC level where I have a good relationship at a local bank, there doesnt seem to be a difference.

Alex Bekeza · Answer

@Jason T. Many mortgage brokers are losing their clients to other brokers staying on top of the Non Qm/Commercial/Portfolio market right now.  There are several options out there now although likely capped at 70% Cash Out at slightly higher rates than we were seeing Pre Covid.

No more cash-out refis for investment properties?

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