Cash-out Refinance - Policy Changed During COVID-19?

Question

Today I am looking to do 30-year conventional cash-out refinance on my 6th property after rehab. My broker told me that they updated policy lately on rental property

-- 70% LTV (was 75%)

-- Can't do any loan if owner owns more than 5 properties. (was ok with up to 10 loans on 10 properties)

So basically I am rejected. Is this a broker specific rule or it is the same across all lenders during COVID-19? I don't see any change in Fannie Mae guild line regarding max of 10 properties that have mortgages.

Property is located in Fort Lauderdale BTW. Anyone happens to know lenders or brokers that can do 30-year conventional 75% LTV cash-out refinance with around 4% rate on rental property?

Todd Rasmussen · Answer

@Weng L.

It sounds like your lender responded to covid by placing additional requirements/restrictions in excess of the minimums established by freddie/fannie. Search for other conforming lenders that have not reacted as strongly. I'll pm you a contact.

Weng L. · Answer

Lol, 7% with a 2% origination mortgage, what a joke! Suntrust Bank offerred me no-cost unsecured personal line of credit $52500 for prime+1.25

I don't do flip because I don't have a good project manager, I have to manage progess of remodleing myself, so hourly income of repair-and-sell is very low, unlike repair-and-rent's hourly income from rental profit is really good over past 2 years - barely get a service call from tenants but mostly from HOA about paiting, roof cleaning, etc. You case many be different then

Share Ross · Answer

Reach out to more lenders. If they do their own underwriting .... they might have diff rules

Matt Nico · Answer

If you are in a big hurry to cash out then I would say call a bunch of lenders. I know a handful of them told me that the loan programs were either put on pause or adjusted for the lower 65%-70% LTV. However, I'm hearing a lot of the normal programs will start to become available in the first week of June.

If you can wait a month or two, I would just say to stay patient, rent your place out, and get the appraisal in a month or so when everything gets more back to normal.

Also you dont have to do a Fannie / Freddie loan. There are no doc loans that I see interest rates in the low 5%'s

Steve F. · Answer

also had a similar experience today. everything seems to be on pause.

Brett Tvenge · Answer

@Weng L. My lender cash out refi on investment property are halted altogether.

Kerry Baird · Answer

@Audra Luther, I pulled my own credit at MyFico and then called every lender I could find in my county.  I asked about their rates, terms and DTI, and made a chart.  Some banks or credit unions have more of an appetite for a certain type of product, say commercial properties, or owner occupied, or purchase mortgages.  Credit unions have an interest in the local community, as do community banks, so try there. Don't let them pull your credit until you approve of their terms and know they are a good fit for you.

@Mike S., commercial or portfolio lending is a different experience all around.

Mike S. · Answer

I did a refi (no cash out) earlier this year with my credit union on my primary residence. It took 6 months :-(. The only good part is that during that 6 months the rate went down a bit and I was able to lock it down.

I did a cash out on an investment property this summer (at a commercial loan rate with another local bank), it took them 3 weeks, but I had to slow them down as my attorney couldn't keep their pace :-). We closed on it in 35 days.

Audra Luther · Answer

@Weng L.

I wasn’t able to do a cash out re fi on my investment property in April, decided to wait for the covid storm to pass and am trying to re attack now.

I have a credit union that says they can do 75% LTV buttttt only one person at the credit union can do re-fi’s and he is horrible at getting back to me and getting the process moving!! I understand with low rates everyone is refinancing but I am still having trouble doing a cash out now (Dec) due to covid.

It’s kinda killing my real estate dreams!! Let me know if you find anyone to help!

Navid A. · Answer

@Weng L.

I spent over 8 hours today calling new lenders to find a solution to the same problem. My typical portfolio lenders on the secondary market have halted operations or they have changed their terms significantly. Their new terms are almost laughable, they might as well just stay closed. Who would be willing to do a 55% LTV cash out at rates above 7% with a 2% origination? Get out of here...

Made the decision on my end to pivot our strategy all together. The deals are coming gents,now is the time to stay liquid. For this reason, I'm doing flips now rather than rentals. Just my 2 cents

Cash-out Refinance - Policy Changed During COVID-19?

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