Great New Cash Out Refinance Option!
In the past, Fannie Mae required someone to have owned a property for a minimum of six months before they were allowed to pull any available cash equity out of their property. Well that just changed; for the better!
Fannie Mae has made the following change:
Borrowers who used cash to purchase a property are now eligible for a cash-out refinance if all of the following requirements are met.
*The transaction must have been an arms-length transaction.
*The borrower must have paid cash for the property at the time of purchase and this must be documented by the HUD-1 on that transaction, to confirm that no mortgage financing was used to obtain the property.
*The source of funds must be documented
*All investor cash-out refinance eligibility requirements are met and cash-out pricing is applied.
Note, that despite the fact that the purchase of the subject property must have been with cash, the borrower MAY have used an unsecured loan or Home Equity Line of Credit (on another property) to have made the purchase. The new loan amount cannot be more than the actual documented amount of the initial investment in the property plus the financing of any closing costs, prepaid fees and points. It is also required that if any loan, not secured against the subject property, was used to finalize the purchase, that transaction will be required to be paid off and subsequently documented on the HUD-1 settlement statement.
So for any folks out there who bought a property for cash within the last six months, and who are wanting to pull some available equity out, this option is now available to you.