Fannie and Freddie new Cash out Refi Rules

[Nathan Harden]

Hey BP community!

With Fannie and Freddie proposing that the new cash out refi period going from 6 months to 12 months, I am curious to hear how everyone plans to continue to BRRRR with this happening? Are Hard money/Private Lenders going to adapt to this new 12 month plan and extend their pay back periods so that it will give investors enough time to refinance? Are investors going to be moving more towards turn key properties and just buying properties with loans up front or are they still going to be buying with cash/borrowed money then just biting the bullet and accepting that the money will now be held up for 12 months as opposed to 6 months?

I figured that I would ask because I just ran into this potential problem today. One of my current BRRRR's is scheduled to be completed next week but I have only owned it for 4 months so now I am running into the possibility of having my money tied into this property for another 8 months as opposed of doing the refi now. I have thought about delayed financing but that will only be off my purchase price as opposed to the ARV.

I am curious to hear what everyone's strategy will be going forward!

[Jay Hurst]

Quote from @Nathan Harden:

Hey BP community!

With Fannie and Freddie proposing that the new cash out refi period going from 6 months to 12 months, I am curious to hear how everyone plans to continue to BRRRR with this happening? Are Hard money/Private Lenders going to adapt to this new 12 month plan and extend their pay back periods so that it will give investors enough time to refinance? Are investors going to be moving more towards turn key properties and just buying properties with loans up front or are they still going to be buying with cash/borrowed money then just biting the bullet and accepting that the money will now be held up for 12 months as opposed to 6 months?

I figured that I would ask because I just ran into this potential problem today. One of my current BRRRR's is scheduled to be completed next week but I have only owned it for 4 months so now I am running into the possibility of having my money tied into this property for another 8 months as opposed of doing the refi now. I have thought about delayed financing but that will only be off my purchase price as opposed to the ARV.

I am curious to hear what everyone's strategy will be going forward!

 @Nathan Harden  

@Jeremy H.

@Joel Broyles

 Keep in mind these new Fannie/Freddie seasoning requirements ONLY apply to cash out loans. In other words, you can still use the improved value to refi what is owed with no cash back. So, what we do on we make a HML is once we get the take out appraisal to establish the value we will modify our existing HML to raise the loan amount to the max loan to value for the take out product, then proceed with the refi. This makes the take loan a rate/term refi NOT a cash out so we can use the new value. The result is you get the funds you wanted without having to wait the now 12 months, and still refi into a conventional loan.

Or, if you did not do a HML loan with us we do a double close essentially. We do a cash out loan for you on a bridge loan with no pre-payment penalty pulling out the cash, them immediately refi that new loan amount as a rate/term. Again, there is no seasoning requirement for a rate/term. We have been doing both of these for years when it was 6 months but now even better product at 12 months.