Fannie Mae has rolled out new guidelines. Phoenix investors who have recently purchased an investment home for cash can now recoup a large portion of their investment immediately!

Cash Out without continuity: when the property is purchased for cash, the new loan is considered delayed financing, allowing the borrower to recoup the cash put into the purchase.  This can be done even if the borrower owns over four financed properties.

Guidelines:

Delayed Financing Exception

Investors who purchased a property within the past six months are eligible for a cash-out refinance if all of the following requirements are met:

  • The new loan amount can be no 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/CLTV/HCLTV ratios for the transaction).
  • The purchase transaction was an arms-length transaction.
  • The transaction is documented by the HUD-1, which confirms that no mortgage financing was used to obtain the subject property.
  • The sources of funds for the purchase transaction are documented (such as, bank statements, personal loan documents, HELOC on another property).
  • All other cash-out refinance eligibility requirements are met and cash-out pricing is applied.

Note: The preliminary title search or report must not reflect any existing liens on the subject property. If the source of funds to acquire the property was an unsecured loan or HELOC (secured by another property), the new HUD-1 must reflect that source being paid off with the proceeds of the new refinance transaction.

 

Eligibility Requirements for Investor and Second Home Borrowers with Five to Ten Financed Properties

With the exception of high-balance mortgage loans, Phoenix investors and second home borrowers with five to ten financed properties must meet the following eligibility requirements:

Transaction Type Number of Units Maximum LTV/CLTV/HCLTV Minimum Credit Score
Second Home or Investment Property
Purchase 1 unit 75%/75%/75% 720
Limited Cash-Out Refinance 1 unit 70%/70%/70% 720
Cash-Out Refinance (only if delayed financing exception requirements are met — See B2-1.2-03, Cash-Out Refinance Transactions (06/28/2011)) 1 unit 70%/70%/70% 720
Investment Property
Purchase and Limited Cash-Out Refinance 2-4 units 70%/70%/70% 720
Cash-Out Refinance (only if delayed financing exception requirements are met — See B2-1.2-03, Cash-Out Refinance Transactions (06/28/2011)) 2-4 units 65%/65%/65% 720

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