Delayed Financing Issue

[Jonathan Welch]

I purchased a home in October with a hard money loan and am nearly finished renovations.  I plan to live in the house.  The value of the house has gone up SIGNIFICANTLY due partially to cash invested, and primarily due to sweat equity.  I am being told by my mortgage broker that the only valuation that would be looked at is the original purchase price of the house because I haven't owned it for more than a year. 

Is this a "find a different lender" type of issue, or are there laws about this? I basically want to make sure I can access my equity. I'd like to take as much as I can without paying a penalty in the form of PMI or much higher interest rate.

Are equity lines different?  Can I take a regular mortgage and get a new equity line immediately after for 85% of the NEW value?  Just trying to understand options here and while I'm not new to home renovations, the creative financing party is new to me.

[Andrew Postell]

@Jonathan Welch very sorry that this has happened.  To get to the short of it - you can ABSOLUTELY refinance, right now, without waiting.  If a lender is using the ORIGINAL PURCHASE PRICE of a home - that is 100% incorrect.  I mean, that is allowed.  Meaning, is it allowed to be more strict than Fannie/Freddie (we call them overlays).  So, even though Fannie/Freddie would allow a higher appraised value on your property it is allowed that a lender doesn't have to follow that rule.  Lenders can be MORE strict...but not less strict.  It's important for us to work with lenders that have no overlays.

Now, the appraisal is just ONE layer to your post. We also then have to speak about cash out, credit scores, reserves, etc. with Fannie/Freddie. Or, we can just go with DSCR loans.

This has been an ongoing issue for years and years and years.  Not every lender will do what we need to do.  So, it's important to work with the right lenders.  I wrote an entire article on how to structure your deal from the beginning (which means you would need to go back in time) HERE.  You can at least know for the next time.

Again, you can use DSCR loans right now to get what you need. Reach out if you need any help with anything. Certainly here to assist. Thanks!