I am a CA bay area resident. Purchased a property in Missouri in October and paid cash. After cosmetic repairs, the FMV is at least $40k more than the purchase price. Because my personal income dropped last year, I am having a challenge refinancing this property. I prefer to have the cash out so that I can use the funds to purchase another property, rather than have the property free and clear. I have excellent credit. I believe I would be a great candidate for the SIVA loan, but because of the market I can not find any SIVA or similar loans. Any suggestions on how I can refinance the property and get the cash out.
There are very few lenders that do no seasoning cash out refinances, even less for siva. 720 score, no more than 5 financed properties, and max 70% ltv required for siva. It may also be something for a local bank where the property is located if they allow out of state borrowers.
I have many clients learn this the hard way. Ben is right you will have trouble getting this loan done to anyone selling loans to Fannie or Freddie. You need to find a portfolio lender or a local bank. For the next deal I would recommend you use a hard money loan or a rehab loan to fund the deal and try to keep the money you contribute to a minimum.
It is a little more expensive this way but a refinance to payoff a mortgage is a lot easier the a refinance to pull out cash.
You could do one thing and that is take back paper yourself, seller financing. Holding the note for a year you get the monthly payments, then sell a partial equal to the amount you need to invest, at the end of the partial payment period the payment revert back to you and go ahead and sell the balance of the note.
Example: $100,000.00 note 30 year term at 8% interest. That is $733.76 per month or $264,155.25 over the life of the note. If you sold 180 months worth and with the discount that is taken you would get about $100,000.00 to reinvest. at the end of that period the payments will revert back, 168 payments or $123,271.68.
This has been done by others, it is a suggestion.
Good Luck
Paul Weiss
Good Morning Tom:
I’m a banker. I have a couple of lenders who will allow what is known as a “technical refinance.” That’s where you paid cash for the property and they will allow you to recoup that cash within 90days of the purhcase. The draw back is that they are full doc only so your request for a SIVA loan wouldn’t work.
On the other hand, with your declining income, I have been able to get a few people approved even though their income declined. I would say talk to an experienced mortgage banker with a variety of lenders available.
Very Respectfully,
Darron Hay
Branch Manager
Primary Residential Mortgage, Inc.