Why Do Lenders Require Seasoning?

For more details on our No Seasoning loans please visit https://hurstlending.com/investor-loans/no-seasoning-investor-cash-our-refi-loan/

What is seasoning?
Seasoning refers to the amount of time that a property has been owned before it is sold or refinanced. In the mortgage industry, seasoning typically refers to the amount of time that has elapsed since the purchase of a property before it is refinanced. Lenders require seasoning because it reduces the risk of default and provides a more accurate picture of the property’s value.

Why do lenders require seasoning?
Lenders require seasoning for several reasons. First, it helps to reduce the risk of default. When a borrower purchases a property, they may have overpaid for it, and it may not be worth what they paid for it. Over time, the property’s value will become more stable, and it will be easier for the lender to determine its true market value.

Second, seasoning helps lenders to determine whether the borrower has made any improvements to the property. If a borrower has made significant improvements to the property, the lender may be more willing to refinance the property, as it will have a higher value.

Finally, seasoning helps lenders to identify any fraud or misrepresentation. If a borrower tries to sell or refinance a property shortly after purchasing it, it may indicate that they are trying to commit fraud or misrepresent the property’s value.

How does seasoning affect real estate investors?
Seasoning can affect real estate investors in several ways. First, it can limit their ability to refinance a property. If a real estate investor purchases a property and wants to refinance it quickly, they may be unable to do so because of seasoning requirements. This can be a problem if the investor needs to access the equity in the property to fund other investments.

Second, seasoning can affect the value of the property. If a real estate investor purchases a property and makes improvements to it, they may be able to increase its value significantly. However, if they are unable to refinance the property because of seasoning requirements, they may be unable to realize the increased value.

Finally, seasoning can affect the investor’s ability to sell the property. If a real estate investor purchases a property and wants to sell it quickly, they may be unable to do so because of seasoning requirements. This can be a problem if the investor needs to sell the property to fund other investments or to pay off debt.

In conclusion, seasoning is required by lenders to reduce the risk of default and provide a more accurate picture of the property’s value. It can affect real estate investors by limiting their ability to refinance a property, affecting the value of the property, and limiting their ability to sell the property. If you are a real estate investor and have questions about seasoning, Hurst Lending can help. We are experienced no seasoning lender and can help you access your equity without having to wait until your loan has fully seasoned (which is generally one year based on recent underwriting changes adopted by Fannie Mae and Freddie Mac).

REFERENCES

1. 1. Investopedia. (2022). Mortgage Seasoning. Retrieved from https://www.investopedia.com/terms/m/mortgage-seasoning.asp
   2. The Balance. (2022). Seasoning Requirements for Refinancing. Retrieved from https://www.thebalance.com/seasoning-requirements-for-refinancing-315700
   3. Zillow. (2022). What is Mortgage Seasoning? Retrieved from https://www.zillow.com/mortgage-learning/what-is-mortgage-seasoning/
   4. The Mortgage Reports. (2022). Mortgage Seasoning Requirements Explained: Everything You Need to Know. Retrieved from https://themortgagereports.com/7557/what-is-mortgage-seasoning

In addition to being one of the founders of Hurst Lending, I am also an attorney and real estate investor. I have a portfolio of residential and commercial properties. I have been helping our customers buy, sell, and refinance their homes since 2000. 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.

Scott E. Bialek
Co-Founder, Hurst Lending
sbialek@hurstlending.com

*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.