Have you heard of a 6 months cash-out refinance waiting period?

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Submitted by flu on June 26, 2012 - 11:14am

I have a question for folks.

I was just talking to absolute mortgage. It appears that if one buys a property with cash, and then wants to cash-out refinance (assuming the property qualifies), there is a 6 month waiting period before you can get the loan.

Anyone know why?

Also, I'm seeing places will do a maximum LTV of 70-75% on an investment.

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Not sure about the 6 month
Submitted by DataAgent on June 26, 2012 - 1:14pm.

Not sure about the 6 month waiting period. However, I do remember reading something about the tax consequences of mortgaging a cash-purchased home. For IRS purposes, I think the refi is considered a 2nd mortgage with limited tax deductibility. You may want to research that if you're counting on deducting the mortgage interest.

Our broker told us we had to
Submitted by The-Shoveler on June 26, 2012 - 1:21pm.

Our broker told us we had to wait 6 months after the last refi- if we wanted to refi again, but that’s about the limit of my experience with this.

DataAgent wrote:Not sure
Submitted by flu on June 26, 2012 - 2:01pm.

DataAgent wrote:
Not sure about the 6 month waiting period. However, I do remember reading something about the tax consequences of mortgaging a cash-purchased home. For IRS purposes, I think the refi is considered a 2nd mortgage with limited tax deductibility. You may want to research that if you're counting on deducting the mortgage interest.

This was discussed on a separate thread. As long as it's a investment home, the interest is always deductible on schedule E.

Yes, that makes sense. The
Submitted by DataAgent on June 26, 2012 - 2:53pm.

Yes, that makes sense. The problem probably only applies to personal residences.

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