Cash Out on an Investment Property: How Soon After Purchase?

By
Mortgage and Lending with W.J. Bradley Mortgage Capital LLC (NV License # 504) NMLS 557038

Cash Out on an Investment Property: How Soon After Purchase?

Question: How long must I wait before I do a cash out refinance on a Las Vegas property that I recently purchased with cash?

Answer: You don't have to wait!  You can do a cash out refinance today on a Las Vegas property that was purchased with cash yesterday!

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Now, let me define what I am calling a cash purchase.  I don't mean that you went into contract on your Las Vegas home, then went a grabbed a big bag of CASH and plopped it down on the closing table.

When I say a cash purchase, I am saying that there was no financing involved and the transaction followed the typical Las Vegas customary purchase transaction procedures.

So, back to the answer, YES you can pull cash out on a primary residence, second home, or an investment property that was purchased with cash the day after you close. 

The common misconception is that you have to wait 6 or 12 months before you can do a refinance and pull cash out when you recently paid cash.  This is not always the case!  Fannie Mae has no seasoning requirements on cash out refinances.  Many lenders and banks require their own waiting periods.  More of those pesky lender overlays!

HOWEVER, there are a few that don't have those waiting requirements in place.

Here in Las Vegas, our real estate market is so competitive, sometimes people have to resort to paying cash in order to get their offers accepted.  Also, many investors are buying multiple properties at the trustees sale which is cash only.  Those Las Vegas home buyers do not have to wait to free up their cash.

Las Vegas, NV home buyers who purchased a subject property within the past six months prior are eligible for a cash out refinance if all of the following requirements are met: 

  • The purchase transaction must have been an arms-length transaction. If the seller of the property was an LLC, the principals of the LLC must be documented.  
  • The purchase transaction must be documented with 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 LTV of the refinance must be based on the lesser of the original sales price or the current appraised value. 
  • The source of funds for the purchase transaction must be documented by providing bank statements, personal loan documents, HELOC statement on another property, etc.  Any loans used as the source for the purchase transaction will be required to be repaid on the new HUD-1 of the refinance.  
  • All other cash-out refinance eligibility requirements. 
  • 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 ratios for the transaction).

If you or your clients can benefit from a cash out refinance on a recently cash-purchased investment property, please contact me right away!  I can help.
 
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Provided by Rey Gallegos | Loan Officer | NMLS 557038
W.J. Bradley Mortgage Capital Corp. (NV License # 504)
C 702.808.8328 | O 702.800.5077 | LV.NV.LO@gmail.com
Copyright 2007 - 2011
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