Refinance investment property bought with HELOC

Folks,

I have an investment property that has seasoned for 6 months. It was bought with HELOC funds (not conventional mortgage). My lender now tells me that because of Fannie Mae guidelines that they are not able to refinance due to the “free and clear” nature of the purchase. Apparently getting cash back for what I have left of the property is not an option. The goal was to replenish the variable rate HELOC with the refinance and lock into a longer term fixed. I’m still trying to find the restrictions on Fannie Mae that prevent the refinance.

Any input or options I can explore.

Regards,
Neil

Find a lender that will sell your loan to Freddie Mac. They do not have the 12 month requirement for properties without a lien.

Apparently, Fannie Mae will only permit limited cash out refinances. Since your property is free and clear, there is no loan to refinance and you don’t qualify for a refinance under the Fannie Mae guidelines.

You need to find a portfolio lender that will permit a cash out refinance. Try your credit union, smaller regional bank, or a local savings and loan. If that fails, a mortgage broker may have funding sources for your loan.