Cash Out Refinancing

Important Terms & Info

There are 14 different loan programs to choose from. The following are general terms.


Property Type - Multifamily with 5 or more units

Ineligible Property - No rehab, turnarounds or handyman specials

Transaction - Cash out

Ownership - Most entities, corporation, LLC, LLP or individuals

Credit - borrower must have a FICO score of 680 or better

Loan Amount - $500,000 to $50,000,000

Loan-to-Value - Refinance: Cash out 75% LTV

Second Mortgage - Second mortgages not allowed

Amortization & Terms - Up to 30 years amortized. Initial fixed for a period of 3 years, 5 years, 7 years, 10 years, 15 years and 30 years

Interest - Call for quote

Rate Lock - Depends on lean program selected

Escrow - Depends on loan program selected

Recourse - Depends on loan program selected

Seasoning - Generally do not allow refinancing during the first 6 months of ownership

Appraisal - The appraiser must be state-licensed

Survey - Survey required if not otherwise satisfactory to Title Company

Inspection - Depends on loan program selected

Environmental - Depends on loan program selected

Title Insurance - ALTA lender's title insurance satisfactory to lender

Termite - Depends on loan program selected

Other Cost - The borrower will be responsible for paying all costs associated with the transaction including, but not limited to: appraisal, survey, title insurance, credit reports, property condition inspection, flood insurance and legal fees if required.

DSCR (Debt Service Coverage Ratio) - 1.25:1. Determined by dividing actual NOI by Debt Service (PI). This is the minimum acceptable. Some loans will require higher DSCR.

NOI (Net Operating Income) - This is the net profit after all property related expenses have ben paid excluding the debt service payment (mortgage PI payment).

Vacancy - Market

Management - Use greater of, market or 5% of EGI as a management fee expense for underwriting

Replacement Reserves - As a minimum use $150-$200 per unit for any replacement reserve for underwriting. (Can be adjusted downward if operating statements show repairs and maintenance items)

Assumable - Qualifying assumptions with a 1% fee

Pre-payent Penalty - Depends on loan program selected