Real Estate Agent · Colorado Springs, CO · Member since 2016 · 109 posts · 96 votes
We are planning to use a HML to fund the initial purchase of a property. We will then rehab, rent, and refinance. However, I have a question on the refinance part.
Does anyone know of any banks (either portfolio lenders or conventional mortgages) that will allow for a re-fi less than 12 months (or even less than 6 months) in Colorado? Basically I would like to perform the rehab, get renters in and then immediately refinance based on an appraisal. Is this even possible, even for a portfolio lender? I know conventional typically require 6-12 months.
This will be property #6 in my name alone, but I am able to qualify for Fannie/Freddie loans. If I do private/portfolio, I am just looking for the rate to be reasonable (not HML-type rate).
I know that we aren't allowed to give out referrals in the forum, so please send me a PM if you know of anyone who might be a good fit for what I am looking for.
Lender · Denver, CO · Member since 2009 · 1k+ posts · 597 votes
9y
Depends on how good your refinance lender is. What I've done in the past is work on the refinance right after I purchased the property and just wait to order the appraisal until the work is done. That way the only thing the lender is waiting for is the appraisal. Appraisals are pretty slow in the Denver metro right now so that I could take 3 to 4 weeks alone.
Lender · Denver, CO · Member since 2009 · 1k+ posts · 597 votes
9y
@Jenny Bayless You may not need a cash out refi if you structure the deal a little different - if you are using an HML to purchase and rehab the property, presumably at about 70% of the ARV and then do a rate and term refi into your conventional loan. The conventional lender will lend you 70-75% of the value, you can typically roll your closing costs of the refi into the new loan - only leaving about 3% of equity above the conventional loan requirement (not worth cashing out because of the seasoning requirements). The 6 month cash out refi (when you haven't paid cash for the property), I believe to be a fannie requirement, most banks are going to be 12 months.
If you are not getting 70% of the ARV in your initial loan and paying HML rates you may look around a little bit. I bought most of my rental properties using this strategy and would be happy to walk you through it if the post isn't clear.
Lender · Denver, CO · Member since 2009 · 1k+ posts · 597 votes
9y
Depends on how good your refinance lender is. What I've done in the past is work on the refinance right after I purchased the property and just wait to order the appraisal until the work is done. That way the only thing the lender is waiting for is the appraisal. Appraisals are pretty slow in the Denver metro right now so that I could take 3 to 4 weeks alone.