On June 28th, 2011 Fannie Mae announced a guideline change pertaining to taking cash out on properties purchased within the previous 6 months - called the "Delayed Financing Exception".
Previously Fannie Mae required 6 months to elapse between when a borrower purchases a home and applies for cash-out refinancing, however now cash out is permitted within 6 months of purchasing when no financing was obtained for the purchase of the home, given 4 requirements:
1. The new loan amount must not be more than the borrower's initial investment in purchasing the home + you can finance closing costs, points & pre-paid items (i.e. escrow accounts). Initial investment is defined as the sales price, not the sales price + cost of improvements done to the property.
2. Purchase transaction must have been an arms length transaction, meaning the only relationship between the seller & purchaser had to arise out of the interest of purchasing that home, no prior relationship permitted.
3. The purchase transaction has to be documented by a certified HUD-1 showing no mortgage financing was used to purchase the home. A HUD-1 is not always used in a cash transaction, so make sure you are requesting one to be done or you'll run into trouble with this part of the requirements.
4. The source of the funds for the purchase need to be documented, such as bank statements, a HELOC from another property, personal loan, etc. It also either needs to be seasoned for 60 days or from an acceptable source. Any financing that was used to for the purchase transaction will also need to be repaid with the proceeds of the new cash out refinance.
When did you purchase this property? we have a program that allows you to recover up to 75-80% loan to value based on your purchase price. Please call Houtan Hormozian at 310 348 7878 or email Houtan.Hormozian@cretico.com for more info.
June, 28, 2011
Fannie Mae has updated their selling guide to allow cash out refinances without the previously required 6 month seasoning period.
Currently, Fannie Mae requires a minimum of six months to elapse between the time a borrower purchases a home and subsequently applies for a cash-out refinance. The Selling Guide has been updated to allow a cash-out refinance within six months of a purchase transaction when no financing was obtained for the purchase transaction under the following parameters:
◦The new loan amount is not more than the actual documented amount of the borrower's initial investment in purchasing the property, plus the financing of closing costs, prepaid fees, and points (subject to the maximum LTV, CLTV, and HCLTV ratios for the transaction).
◦The purchase transaction was an arms-length transaction.
◦The purchase transaction is documented by the HUD-1, which confirms that no mortgage financing was used to obtain the subject property.The preliminary title search or report must also confirm no liens on the subject property.
◦The source of funds for the purchase transaction can be documented (bank statements, personal loan documents, HELOC on another property). Any loans used as the source for the purchase transaction will be required to be repaid on the new HUD-1.
◦All other cash-out refinance eligibility requirements are met and cash-out pricing is applied
Feel free to contact me if you still found a source for your loan!
best, Jeff Marr
Alpine Mortgage Planning
I look forward to helping you.
Senior Loan Officer
Hi-Tech Mortgage, Inc.
CA DRE License #01845350
Phone 916-548-8533 / Fax 916-372-2518 http://www.jessicalombardo.blogspot.com
FHA w VA w Conventional w USDA Rural Housing