Great New Cash Out Refinance Option!

By
Mortgage and Lending with Bank of Oregon a division of Willamette Valley Bank

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.

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Rainer
317,961
Carla Harbert
Full Time REALTOR in Ohio - Brunswick, OH
RE/MAX Omega, Brunswick Ohio

That is good news, which tells me that investors that have been paying cash and really should not have been penalized, especially when past transactions were all in good standing, can now do a cash out refinance. I'll be looking into this further.

Jul 13, 2011 07:47 AM #1
Rainer
143,052
Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

This is good news, Carla.  And yes, a nice change that good investors can take advantage of the equities they have.  Thanks for reading and commenting!  :)  All the best to you! 

Jul 13, 2011 08:01 AM #2
Rainmaker
1,356,573
Nick T Pappas
Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Hun... - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

Karen, yes this does sound like good news especially for investors as they more so than primary buyers are coming up with cash...just my opinion though.

Jul 13, 2011 08:05 AM #3
Rainer
143,052
Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

I think you are right on, Nick!  :)

Jul 13, 2011 09:25 AM #4
Rainer
127,411
Cristina Salcedo
REMAX Champions - Riverside, CA
Corona, Riverside Realtor

Karen this is great news for inventors.  That means they can get their money out and buy more properties.

Jul 13, 2011 02:52 PM #5
Rainer
143,052
Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

Hi Christina!  I have felt that for too long good investors were being "punished" by current lending standards..Hopefully this will enable them, and even folks who bought their owner occupied homes for cash to benefit on today's great rates.  Thanks for your visit!  Wishing you all the best and continued success! 

Jul 13, 2011 04:28 PM #6
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Rainer
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Karen Burket

Valley Mortgage Grou, Conventional, FHA, VA, mortgages
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