BRRRR fun fact about refinancing

[Carl Crump]

Hello BP,

So I was doing some research for a client of mine I am doing some loans for. I know a decent amount about most programs but learned something new today that could be helpful to others looking to employ the BRRRR method.

So I know the delayed financing exception has been talked about here before. It pretty much in an exception for the 6 month seasoning on a cash out refinance. I knew about the rule but did not know how easy it is to get one. So it is a Fannie Mae rule and if you bought the property with cash or did not use mortgage financing you can qualify for the exception for the most part. So if you used a HELOC, cash, gift funds you can get cash out immediately. I am not 100% sure but I think a hard money loan would qualify also...

You can even refinance as an individual, LLC or partnership where you together own 100%. This is great to know when considering whether to use leverage or not. Remember the cash out percentage will be 75% max with Fannie and it can not exceed the amount of the settlement statement for the initial purchase. Another hack to this is to work with the title company and add repairs and costs to the initial settlement statement at time of purchase to maximize your cash out.

Then after you finish your repairs you will have to of course hope the appraisal comes in at good value, but do NOT have to wait 6 months!   Hope this makes sense and it may not be the best option every time.  It will be helpful to my business and hope it will help some of you also.

Let me know if you have any questions...