Bank that do not required seasoned properties for loans

Jacksonville, Florida
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Bank that do not required seasoned properties for loans

Eugene DuShawn Smith
New to Real Estate · FL · Member since 2022 · 20 posts · 11 votes

Good Morning, I live in Florida and I've owned a town house in WV for just under 5 years now; 4 years and 2 month's to be exact. It currently has a mortgage and has been occupied with tenants for just over a year and I'm now wanting to put that home under my LLC, but cannot find a bank willing do a (LTV) loan to value because the home isn't seasoned meaning it hasn't been occupied by me or a tenant of mine for 5 years or more. does anyone know of a bank that that can help?

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Kevin Romines
Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
4y

I have never heard of such a seasoning requirement. I'm not sure if I am misunderstanding what you are saying or if the lender has some highly oddball seasoning requirement? You can now do both a Fannie Mae and Freddie Mac loan in your personal name and then transfer the title to and LLC after closing without violating the Due on Sale clause. Fannie changed theirs back in 2016 and Freddie Mac just changed their rules allowing this.

That said, the best terms you will get for this loan will be Fannie Freddie. You can also do a Non-QM loan directly to your LLC with you giving a personal guarantee. There is only a seasoning requirement if you want to pull cash out and that is 6 months with Fannie Freddie or 3-6 months with Non-QM loans. If you don't want any cash out, there is no seasoning requirement. There is no additional seasoning requirement to move the property to an LLC that you are the majority member of. You already have met any seasoning requirement to get a cash out refinance if that is what you are wanting to do?

So again, unless I misunderstood, this lender has a highly odd requirement. Get a new lender!!!

I hope this helps?

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  • Kevin Romines
    Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
    4y

    I have never heard of such a seasoning requirement. I'm not sure if I am misunderstanding what you are saying or if the lender has some highly oddball seasoning requirement? You can now do both a Fannie Mae and Freddie Mac loan in your personal name and then transfer the title to and LLC after closing without violating the Due on Sale clause. Fannie changed theirs back in 2016 and Freddie Mac just changed their rules allowing this.

    That said, the best terms you will get for this loan will be Fannie Freddie. You can also do a Non-QM loan directly to your LLC with you giving a personal guarantee. There is only a seasoning requirement if you want to pull cash out and that is 6 months with Fannie Freddie or 3-6 months with Non-QM loans. If you don't want any cash out, there is no seasoning requirement. There is no additional seasoning requirement to move the property to an LLC that you are the majority member of. You already have met any seasoning requirement to get a cash out refinance if that is what you are wanting to do?

    So again, unless I misunderstood, this lender has a highly odd requirement. Get a new lender!!!

    I hope this helps?

    2Reply
  • Kyle DeutschmannPro Member
    Investor · Washington, DC · Member since 2017 · 428 posts · 205 votes
    4y

    I’m also confused by your lender’s requirements. Maybe they thought you said 5 months not 5 years? 6 months seasoning isn’t uncommon if you purchased using a mortgage originally. 

    As Kevin has said, Fannie/Freddie conventional loans would be your best bet, although there are lenders out there willing to let you close the property in an LLC. If you're willing to get a 7 year ARM (meaning fixed for the first 7 years and adjustable once per year after that) the rates are pretty comparable currently even closing in an LLC to conventional fixed rates on investment properties, and you don't have to switch the title and pay a second attorney after closing to do so.

    [email protected]
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  • Matthew CrivelliBusiness Member
    Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
    4y

    I would be happy to take a look! DSCR loans are available for this exact purpose. Commercial 30Y fixed is what you are looking for. @Eugene DuShawn Smith

    [email protected]413-348-8346
    Freedom Capital Funding, LLC523 Reviews
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  • Account Closed
    Lender · CA · Member since 2022 · 48 posts · 23 votes
    4y

    I have never heard of this requirement either. You could use a private lender to avoid any nonsense, as such. They typically are the best route to take when placing a property under any entity. As far as rates go, conventional is also an option, as the others have said, because they do provide better rates than PML do. 

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  • H. Jack Miller
    Lender · Boca Raton, FL · Member since 2014 · 250 posts · 133 votes
    4y

    I am guessing something is off here. Usually banks have a 12 month or some period of time of seasoning, But I have never heard of 5 years, you want to clarity with them

    1Reply
  • Andrew Garcia
    Lender · Charlotte, NC · Member since 2022 · 739 posts · 410 votes
    4y

    Hi @Eugene DuShawn Smith, I have never heard of such a requirement. It is neither a Fannie or Freddie requirement, nor a non-QM guideline.

    If you are closing in an LLC, non-QM is your option. You can qualify based on the current rents of the property.

    The rates are not that much worse and it allows you the protection of an LLC.

    Please let me know if I can be of any assistance.

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  • Eugene DuShawn Smith
    OP
    New to Real Estate · FL · Member since 2022 · 20 posts · 11 votes
    4y

    Thank you everyone. your replies have been very helpful I now know to use a private lender. Its unfortunate but YES 5 years is seasonal with Navy Federal and they will not LTV for anything less

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  • Andrew Garcia
    Lender · Charlotte, NC · Member since 2022 · 739 posts · 410 votes
    4y
    Quote from @Eugene DuShawn Smith:

    Thank you everyone. your replies have been very helpful I now know to use a private lender. Its unfortunate but YES 5 years is seasonal with Navy Federal and they will not LTV for anything less

     @Eugene DuShawn Smith, you do not have to use a private lender. You just will not be able to use conventional or FHA financing. You can still go through a licensed mortgage broker or another reputable lender that has access to investor-friendly products.

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  • Ryan O'Mara
    Financial Advisor · Des Moines, IA · Member since 2017 · 173 posts · 58 votes
    4y

    @Eugene DuShawn Smith - a 5yr seasoning requirement is ridiculous.  12 months is the most I see.  Many lenders only require 6 months and I work with some that have no seasoning. 

    Plus these seasoning requirements are typically only relevant for investors that have done some sort of value add (rehab) to the property since they purchased it and are now wanting to refi based on the improved value.  Even in those situations almost any lender will lend immediately on a LTC (loan to cost).  Meaning they will take what you paid for it + any money you put into it and lend a % of that.  

    There are many options for you.

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  • Issac San Miguel
    Lender · Austin Texas · Member since 2022 · 319 posts · 156 votes
    4y

    With the rates rising - pay attention to prepayment penalties.  On some of the dscrs I have seen are 30yrs with 5%/5%/5%/5%/5% structure.  While in the short term rates are expected to rise, for how long and how much is currently under scrutiny.

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