12 months seasoning for CASHOUT 1 to 4 unit refinances, EXCEPT?

[Kenny Simpson]

Fannie and Freddie are NOW going to require for 12 month seasoning to do a cash out refinance for even owner occupied properties starting in early 2023. I would NOT be shocked if other portfolio or NON-QM options follow these guidelines in the near future. Yes, there will be other options if you need a cash out refinance before the 12 months, terms/products/rates might NOT be as competitive. It seems they are really trying to slow down the market and keep money out of the system, cash out refinances were a BIG part of the refinances over the last few years. As the market changes for better/worse we will always see changes in lending, don’t be surprised as we move forward in the coming years lending guidelines to continue to change with the market conditions.

See below for exact guideline and what will be acceptable moving forward:

For all cash-out mortgages paying off a first lien mortgage, the following seasoning requirements must be met:

• The first lien mortgage being refinanced must be seasoned for at least 12 months (measured from the Note date of the mortgage being refinanced to the Note date of the cash-out refinance mortgage
• Original note date would be validated by the credit report or title commitment.

The seasoning requirement does not apply for the following cash-out refinance transactions:

• Loan proceeds to buy out the equity of a co-owner for an owner-occupied primary residence special purpose cash-out refinance transaction:
• When property has been jointly owned for 12 months prior to initial loan application; unless parties have inherited or was legally awarded the mortgage premises.
• Fully executed written agreement by borrower and co-owner stating terms of property transfer and disposition of refinance loan proceeds
• No cash back is permitted to the borrower retaining sole ownership of the property.
• Received an accept AUS decision and meets maximum LTV/CLTV for cash out refinance transactions.
• The first lien mortgage being refinanced is a Home Equity Line of Credit (HELOC)

If you have any questions, please reach out to us 😊

[Mitch Davidson]

Agreed, @Kenny Simpson. This really injures the "buy now and you may be able to refi soon" concept. One thing I would add to your "does not apply" list is the fact that if the property is purchased with cash, or with other financing that doesn't involve a lien on the property, the owner can close on a cashout after 180 days have passed from the original purchase. So, investors using private money and no liens can still BRR pretty quickly.