All Forum Posts by: Jerry Padilla

@Chanakya J.

At 6 months you can close on a refinance, with conventional based on ARV regardless of how you initially purchased the property. You can start this process sooner than 6 months and close just after you hit that mark.

@Avi Yanivor

You aren't limited to an LTV of 45%.

For a SFR you can go as low as 15% down and a MFR is 25% down.

With conventional financing you are required to have one years experience as being a landlord to include rental income. This is a recent requirement. So you have to qualify for the mortgage based on your own income. You may need to look at a lower price point to get yourself started.

@Matthew Cervoni

All primary homes have a 1 year requirement to live in the property, for Conventional.

@Leigh Ann Lozano

Great thoughts! With conventional - which is where you will see your lowest rates, you are limited to 10 financed properties and then will have to switch over to portfolio lending. Maximizing your cash out will allow you to purchase more properties and hopefully overall increase your monthly cash flow with all of your properties. Depending on your interest rates, it may even drop your rate, as rates are great right now. 
With conventional financing you can go up to an LTV of 75% on a SFR and up to 70% on a MFR.

DELAYED FINANCING EXCEPTION

Delayed Financing Exception

A cash-out refinance within 6 months of a purchase transaction when no financing was obtained for the purchase transaction. Delayed financing is allowed under the following parameters:

• The new loan amount is not more than the actual documented amount of the borrower’s initial investment in purchasing the property, plus the financing of closing costs, prepaid fees, and points (subject to the maximum LTV).
• CASH OUT FINANCING AND DELAYED FINANCING HAVE THE SAME LTV REQUIREMENTS - BUT DELAYED FINANCING IS SUBJECT TO A MAX OF PURCHASE PRICE PLUS CLOSING COSTS.
• The purchase transaction was an arm’s length transaction
• The purchase transaction is documented by the HUD-1, which confirms that no mortgage financing was used to obtain the subject property. The preliminary title search or report must also confirm no liens on the subject property.
• The source of funds for the purchase transaction can be documented (bank statements, personal loan documents, HELOC on another property). Any loans used as the source for the purchase transaction will be required to be repaid on the new HUD-1
• Funds received as gifts and used to purchase the property may not be reimbursed with proceeds of the new mortgage loan. Funds of gifts are not allowed with investment purchases.
• All other cash-out refinance eligibility requirements are met and cash-out pricing is applied. This is allowed on primary residences, second homes and investment properties per cash-out guidelines.

Here are some links that you may find beneficial as well!

Maximum Loan Limit Look up for your area can be found here;

Look Up Conforming Limits For Your Area!

• Current appraised value is used to determine LTV
• Property must not be for sale, and must be taken off the market on or before the disbursement date.
• A Rate & Term Refinance can be used to pay off existing unpaid principal balances on the subject property, closing costs, prepaids, and points.
• No seasoning requirement.

Freddie Mac and Fannie Mae are both conventional lenders. They each have their own set of guidelines to be followed. There are investor friendly lenders that are able to specifically follow just one set of guidelines below. Below are the required LTV for Rate and Term Refinances.

Freddie Mac - min credit score : 620 - up to 6 mortgaged properties

Fannie Mae - min credit score: 620 - up to 6 mortgaged properties

Min credit score: 720 - 7-10 mortgaged properties & minimum loan amount of $50k at property 7 and above.

THESE ARE FOR MORTGAGED Properties 1-6; For Freddie Mac, a Rate and Term Refinance for a Primary Residence;

• 95% for 1 unit
• 85% for 2 unit
• 80% LTV for 3-4 units

THESE ARE FOR MORTGAGED Properties 1-4; For Fannie Mae, a Rate and Term Refinance for a Primary Residence;

• 1 unit - 95%
• 2 unit - 85%
• 3-4 unit is 75%

THESE ARE FOR MORTGAGED Properties 1-6; For Freddie Mac, a Rate and Term Refinance for an Investment Residence;

• 80 - 85% for 1 unit and 75% for 2-4 Units..... Up to 6 mortgaged properties allowed.

THESE ARE FOR MORTGAGED Properties 1-10; For Fannie Mae, a Rate and Term Refinance for a Investment Residence;

75% for 1-4 Units

Fannie Mae Guideline for Rate & Term, Mortgaged Property 1-6.

Fannie Mae Guideline for Rate & Term, Mortgaged Property 7-10.

Freddie Mac Guideline for Rate & Term.

Cash Reserve Requirements;

6 months PITI is required on subject property.

If you have 1-4 financed properties than it is now 2% of all unpaid principle balances.

If you have 5-6 financed properties than it is now 4% of all unpaid principle balances.

If you have 7-10 financed properties than it is now 6% of all unpaid principle balances.

Money must be in account for 60 days or sourced. A HELOC can be used as down payment, but not as cash reserves.

Acceptable Sources of Reserves; Cash and assets that are liquid or near liquid

• Checking or savings accounts
• Investments in stocks, bonds, mutual funds, certificates of deposit, money markets funds and trust accounts
• The amount vested in retirement savings accounts
• Cash value of a vested life insurance policy

  Certain assets must be “discounted” when used for reserves. Terms and conditions of liquidation may be required depending on the asset used for reserves.

  Assets Requiring Liquidation
  The following may be counted as cash assets at 100% of verified liquidated amounts:

  • Cash value of life insurance
  • Publically traded stocks
  • Bonds
  • Mutual Funds
  • U.S. Government Securities
  • Savings Bonds
  • Retirement Funds
• Gift Funds - Primary Residence and Second Home ONLY

@Donavon E Frost

That is awesome to see you are so motivated! FHA is a great way to start, with the least out of pocket on a Multi-family residence.

Only 3.5% down and you can also ask the seller to pay a portion towards your closing costs - up to 6%.

@Marco Pangilinan

If you are planning to owner occupy this next property, with conventional, you are required to put down 15% minimum.

@Ron Singh

The appraiser will reach out and schedule an appt with you to view the property. At that point, get their email address and email them all of the improvements that you did to the property.

@Dillon Goral

As mentioned, without more info it is too difficult to answer. It is a great idea to refinance and get rid of mortgage insurance. Rates are low so it is a good time to refinance. If you have enough equity, you can cash out refinance as well, to use as a down payment on your next property.