Author: Jay Hurst, Co-Founder of Hurst Lending
What is the seasoning requirement for a cash-out refinance?
The seasoning requirement for a cash-out refinance is the amount of time that a borrower must wait before they can refinance their mortgage and take our cash based on the stepped-up value of the property. This requirement is in place to ensure that borrowers have made consistent payments on their mortgage and have built up enough equity in their home before they refinance.
The seasoning requirement varies depending on the type of loan and the lender’s guidelines. The seasoning period for most lenders is now 1 year. You may have heard that you can do a cash-out refinance on a conventional loan that has been held for 6 months. This is no longer the case. Fannie Mae and Freddie Mac adopted a new rule on March 7, 2023, that states a loan must be held for a full year before the loan is considered to be seasoned and can be refinanced using the current appraised value. The new rule is as follows:
When proceeds of a cash-out refinance Mortgage are used to pay off a First Lien Mortgage, the First Lien Mortgage being refinanced must be seasoned for at least 12 months (i.e., at least 12 months must have passed between the Note Date of the Mortgage being refinanced and the Note Date of the cash-out refinance Mortgage), as documented in the Mortgage file (e.g., on the credit report or title commitment).
Why does the seasoning requirement matter?
The seasoning requirement is an essential factor in determining a borrower’s eligibility for a cash-out refinance. Conventional Lenders, who sell loans to Fannie Mae and Freddie Mac, must comply with the 1-year seasoning rule mentioned above.
By waiting for a certain period before refinancing, borrowers have time to establish a track record of responsible payment behavior and increase their home’s value. This, in turn, reduces Fannie Mae/Freddie Mac’s risk.
What are the options for borrowers who don’t meet the seasoning requirement?
If a borrower does not meet the seasoning requirement for a cash-out refinance, they have several options available to them. One option is to obtain a simple rate and term refinance without taking out any cash. Borrowers can refinance at any time without waiting for a seasoning period long as they do not take out cash from the property. If you need to take cash out of your property you want either need to (1) wait for the one you’re seasoning period or (2) work with a no-seasoning cash-out lender like Hurst Lending.
Hurst Lending: Your Solution for no seasoning cash-out Refinancing
At Hurst Lending, we understand that every borrower’s situation is unique, and we are committed to finding the right solution for your refinance needs. We specialize in a variety of loan programs, including no-seasoning cash-out refinances and non-traditional loans, that can help borrowers who do not meet traditional seasoning requirements.
With our program the process is simple:
1. You purchase the house – with cash, hard money, or another type of loan.
2. Make the necessary repairs and upgrades to the home.
3. Use the stepped-up, improved home value for cash out immediately (without having to wait for the loan to season).
We focus on the market rents from the appraisal to determine the potential cash flow for unoccupied properties, further optimizing your investment gains. We believe this solution aligns perfectly with your financial objectives and would be delighted to explore this opportunity with you further.
We also offer personalized service and competitive rates, ensuring that our borrowers receive the best possible refinancing experience. Our team of experienced mortgage advisors can guide you through the refinancing process, answer any questions you may have, and help you make an informed decision.
The seasoning requirement is an essential factor in determining a borrower’s eligibility for a cash-out refinance. By waiting for a certain period, borrowers can establish a track record of responsible payment behavior and build up equity in their home.
However, for borrowers who do not meet the seasoning requirement, there are still options available, including waiting until they meet the requirement or working with a no-seasoning like Hurst Lending.
If you are considering refinancing your mortgage but are unsure if you meet the seasoning requirement or are exploring alternative options, contact us at Hurst Lending. We are committed to providing our borrowers with the best possible no seasoning refinancing experience and helping them achieve their financial goals.
Consumer Financial Protection Bureau (CFPB) – “Refinancing Your Mortgage”: https://www.consumerfinance.gov/owning-a-home/refinancing/
Investopedia – “Seasoning”: https://www.investopedia.com/terms/s/seasoning.asp
Bankrate – “What is mortgage seasoning?”: https://www.bankrate.com/mortgages/mortgage-seasoning/
NerdWallet – “Mortgage Refinance Requirements: A Complete Guide”: https://www.nerdwallet.com/article/mortgages/refinance-requirements
The Balance – “Mortgage Refinance Options for People with Bad Credit”: https://www.thebalance.com/mortgage-refinance-options-for-people-with-bad-credit-4164527
About Jay Hurst
In addition to being one of the founders of Hurst Lending, I am also a financial planner. I have been helping our customers buy, sell, and refinance their homes since 2006. Our suite of industry-leading offers helps solve many common situations faced by homeowners and real estate investors. Have you ever experienced the frustration of trying to buy before you sell; Losing your dream home in a bidding war; Trying to obtain a No-Seasoning Cash-out loan; Being unable to get a mortgage because your new or old house needs modest repairs; or simply because you prefer using our funds to close quickly without having to liquidate other investments? Our Industry-leading suite of short-term loans solves these issues. We also offer a suite of real estate investor loan products and a full suite of conventional, VA, FHA, construction and traditional home loans.
Please feel free to contact me directly if I can help provide a loan for your next purchase or refinance, or even if you just want advice on how to get started or expand your real estate investing activities.
Co-Founder, Hurst Lending
*Disclaimer: This article is intended for informational purposes only and does not constitute legal, financial, or professional advice. Consult with a licensed professional before making any financial or real estate decisions.