Cash Purchase Followed by Cash Out Refi - Timing

[Kristin Haug]

Hi BP Community - I'm looking to invest in a new single family construction and interested in a cash out refi from the start - if it's possible. The local market is very hot and agents have highly recommended making cash offers to increase the likelihood of seller acceptance. I think I can gather the full amount in cash for this transaction (borrowing some from family), however, I don't want to keep 100% locked up and would like to do a cash out refi as soon as possible after closing, leaving a 75-80% LTV.

I spoke briefly with a friend who’s new to the mortgage business and they thought you’d need to wait 6 months after closing before being able to start this process, but they weren’t certain. Hoping someone in this awesome BP community might have insights into whether this can be done earlier than 6 months in, even if it requires taking a different strategy. Open to any and all ideas. Thank you all! 

[David M.]

@Kristin Haug

Is your only issue seasoning time?  You aren't trying to cash out "profit?"

You'd be what this layman believes is a perfect candidate for delayed financing loan.  Its part of a standard, conforming loan (i.e. Fannie Mae, Freddie Mac compatible).  Nothing special so no extraordinary lenths are required.  My lender will do it.  Basically, the Fanne/Freddie rules allows for somebody to obtain their loan within 6mo after closed based on the PURCHASE price of property.  This doesn't work for most/all investors here doing the brrr or similar.  But, if you just want to make a cash offer to have a stronger offer, have the cash to close, close, then get your loan, a delayed financing approach is the way to go.

Feel free to direct message me if you want to chat and/or want my lender contact info.  Good luck.