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 |
Contact Phoenix Investment Property Partners for a referral to mortgage broker who can assist in building stronger Residential Rental Investment Portfolio
Oggy Karchev Investment Property Consultant(602) 292-2564
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