limits on refinancing out of HML

[phatman5]

When refinancing out of hard money, does it reach a point where lenders will no longer let you refi into a conventional loan because your debt between various loans reaches a max, or is the refinance based completely on the equity in the homes you refinance.

I do not want to get to a point where I buy a house with hard money and get stuck unable to refi due to high debt to income or, a large loan balance between various loans.

Thanks.

[christopher w]

Debt to income ratios are always a factor except in the case of a "no ratio" loan. The no ratio product does not require the borrower to declare income on the 1003. 

[Investment Loans]

What you are looking ahead to is very common for investors.

Some factors here will be # of properties you own and if you want cash out (seasoning comes into play).

The debt to income ratio will only be an issue for investors who want to go full doc or stated income.  Like Christopher said, there are "no ratio" programs that investors must show a 2 year history of employment but do not list an income.

There are also lenders that will allow investors to have unlimited properties and also do cash out with no seasoning.

[housebroken]

Ben, who are these lenders?
Please tell me one lender that will allow a reduced doc borrower to refi using a higher value with "no seasoning." Oh, and I might add, with an LTV of more than 60%.  Hate to go way out on a limb.
Good luck
-h

[christopher w]

Housebroken,

That was a pretty antagonistic  tone you took with someone trying to offer advice. Ben was only answering the OP, and from what I have read in his postings in the past he does not seem like the type to make things up. However, to answer your question regarding lenders... Ben is correct there are lenders who allow for no seasoning cash-out refi's with reduced doc. Morgan Stanley will allow a stated doc no seasoning cash-out refi up to 80% LTV (I believe you were looking for > 60%). That is just one example. I closed one of these three weeks agos where the borrower paid 74K for the property through HUD. It appraised for 120K. He refi'd the property to 80% (96K) 10 days later ( we had to wait for the title to be recorded and updated with customers name). So in 10 days he now has the property at 80% LTV (it actually cash-flows), and 22K (minus closing costs) in his pocket to use for more property aquisition.

When people in the forums advise you to use a broker who specializes in investment properties (for example...mdhaas, rjbaxter, investment loans,  etc...)they are doing it for a reason. We are good, and we know what we are talking about (most of the time at least).

[phatman5]

Ben, my partner and I should be done rehabing our first property in 5 weeks. We planned to refinance out of our HML, but without 6 mos. seasoning you are saying we will not be able to cash out?

If we don't cash out will we be able to refinance into a new loan and then get a HELOC w/o seasoning?

[yrush2000]

I am not a broker but I want to throw something into the mix...

YES..you can refi into a conventional loan with less than 6months, even 3 months of seasoning.  You will generally pay a higher interest rate and also cashout will be limited. If you looking to goto 80% LTV max you should be okay and I know there are several banks that will do these loans with no seasoning.  Now if you are worried about DTI ratio and you have a company that is over 2yrs old you can ask your CPA about a letter.  They have stated self employeed loans that have much easier standards oppose to stated wage earner loans.  Plus using a no ratio loan gives better rates than a No DOC loan.    But one of the major factors will be your credit history overall. What is your FICO, any lates, charge offs, bankruptcies, established credit and tradelines, etc. 

All loans are possible especially if you have an 800FICO, but if you have a 580FICO you in trouble.  Today a 720 will give you the access a 680 was giving you in Jan...   

As for what banks do these loans.  That is not to important unless your a mortgage broker.  Most of these banks will deal with only brokers. You are not going to just call them up and get it done.  You need a solid broker who deals with investor loans.  Look for no prepay penalities or at least ones with buy downs. If you have a prepay, know the terms and percentage of the penalty.  Also with cashout, some banks may limit you to 100K range..  Also make sure you have detail pictures of before and after work. This goes along way with the underwritters since you need to justify the value increase.  Sometimes even copies of receipts and invoices will help.  I keep copies of all mine.  I attach them to blank paper and photo copy them and keep them in a binder.  I note on the receipt or invoice the property and what it is for.  If someone needs to know , I am ready...

[Mdhaas]

As for what banks do these loans.  That is not to important unless your a mortgage broker.  Most of these banks will deal with only brokers. You are not going to just call them up and get it done.  You need a solid broker who deals with investor loans.  Look for no prepay penalities or at least ones with buy downs. If you have a prepay, know the terms and percentage of the penalty.  Also with cashout, some banks may limit you to 100K range..  Also make sure you have detail pictures of before and after work. This goes along way with the underwritters since you need to justify the value increase.  Sometimes even copies of receipts and invoices will help.  I keep copies of all mine.  I attach them to blank paper and photo copy them and keep them in a binder.  I note on the receipt or invoice the property and what it is for.  If someone needs to know , I am ready...

Great input!

[Investment Loans]

Ben, my partner and I should be done rehabing our first property in 5 weeks. We planned to refinance out of our HML, but without 6 mos. seasoning you are saying we will not be able to cash out?

If we don't cash out will we be able to refinance into a new loan and then get a HELOC w/o seasoning?

Phatman,

Sorry, I never meant to imply that you couldn't do a cash out refi on an investment property with less than 6 months seasoning.   Never went back over the begining of this thread so I'm not sure what you are referencing.

The reality of these loans is that we do them conistently for investors nationwide; so as Chris said when backing me up, whe know what were talking about.  (btw..thanks Chris).

Seasoning startes from the day that you get added on to title.  One lender that we have always dealt with changed their seasoning guidelines about 6 months ago from zero to 3 months.  You could still get exceptions for less with strong investor files.  Just a couple weeks ago they said no more exceptions.  This includes quit claiming a property from your LLC to your personal name.  They would almost always allow the LLC to own for several months, quit claim, and then cash out with no problem.  No More though!

Another lender that is used quite frequently still has no seasoning up to 90%.  However, the tricky part with them is the vesting on title from the orginal purchase.  If purchased using a llc they will not touch it at all.  But if you bought in your personal name, quit claimed to LLC, then qc'd back to peronal..that would be ok.

There's also plenty of other no seasoning lenders so if you have a little above average scores you shouldnt have any problem, even for reduced documentation loans.

Your question about seasoning is a good one.  Lender's dont really offer a real good heloc for investment properties, especially for reduced doc loans.  70-75%, maybe 80% but you dont really need that route.

In addition to what Yrush said, you also need to make sure the appraiser notes if you purchased the property below market value.