Cash-Out Refinancing for Investment Properties

There has been some news recently that more real estate markets are gaining momentum and prices are started to stabilize and even rise. Here in Wilmington, North Carolina, the Wilmington Regional Association of Realtors reported price increases in five area zip codes last month. For real estate investors, there has been plenty of reasons to sit on the sidelines in recent years as prices continued to sink. Now that there is at least some positive news in certain areas of the country, it might be time to get your ducks in a row and prepare to capitalize on today's lower real estate prices and increased demand for rentals in many communities. Underwriting guidelines may have changed since you last looked at financing investment properties (see Fannie Mae and Freddie Mac guidelines for investment properties). If you are planning on doing a cash out refinance on an existing rental to help pay for the down payment on another property, you may want to check out Fannie Mae and Freddie Mac's cash out refinancing criteria on investment properties.

Fannie Mae - At the time this post was written, Fannie showed the following LTV (loan-to-value) and minimum credit requirements in their eligibility matrix for cash-out guidelines on rental properties.
1 Unit - 75% Max LTV & CLTV - 700 min credit score
2 Units - 70% Max LTV & CLTV - 680 min credit score
3-4 Units - 70% Max LTV & CLTV - 680 min credit score

Freddie Mac - At the time this post was written, Freddie showed the following LTV (loan-to-value) requirements in their eligibility matrix for cash-out guidelines on investment properties.
1 Unit - 75% LTV w/o 2nd Mortgage, 70% LTV w/ 2nd Mortgage, 75% TLTV w/ 2nd Mortgage
2-4 Unit - 70% LTV w/o 2nd Mortgage, 65% LTV w/ 2nd Mortgage, 70% TLTV w/ 2nd Mortgage

There can be lots of variables, terms, and conditions with cash-out investment property financing. Be sure to speak with a licensed mortgage professional to review all the ins-and-outs of these products. Companies such as American Bank Mortgage, CapWest, Amerisave, Quicken Loans, and American Financial Resources offer cash out refinance mortgage programs as do many local, regional, and national mortgage companies.