Refinancing after a foreclosure purchase

If I buy a foreclosure home at the auction, say for 400,000.00 and an appraisal is for maybe 500,000…Is it possible to then get a cash out first mortgage for the property. I would think since I already have 80% equity, I could go with a 50% firtst mortgage and have 250,000 in cash to either fix up the property, if need be, or just have some liquidity. On the face of it, it sounds fairly reasonable. The only questions would be length of time in the home, or if it is an investment property. Any thoughts?

You’ll just need to call some lenders. Programs are changing so quickly at this point I can’t keep up. At the end of the day hard money loans are almost always available at 50% LTV, but they will be more expensive.

So far, I have found that all of the lenders have required 6 month seasoning for any refi. And the LTV is based on the lesser value of what was paid at the auction or the appraisal. Anyone find something different, please let me know as I want to refi another auction property I am keeping as a rental.

Just to be clear neither of those conditions would apply with hard money.

On strategy is to from an LLC to buy the property at auction then sell it back to yourself. The downside is you would need to come up with more capital for the down payment.

Conventional financing (Fannie/Freddie) does require ownership of 6 months before applying for a cashout refinance. LTV would depend on occupancy and FICO scores. The LLC idea is a good idea and you would be able to go higher on the LTV (as a purchase).

We have switched from buying foreclosures to helping provide financing for properties already acquired at auction. If this is something that can help any of you, please feel to call me at 805.484.7800 or email me at:

I would be very careful about having the LLC buy the property then sell it back to you. If the lender is not aware it might be considered fraud. If they were aware it would probably negate the strategy. These days lenders have all sorts of tools to root out such things and prosecution of mortgage fraud is a very high priority and carries stiff penalties. Like prison time.

Not making a value judgement and I do not know if the practice would in fact consititute fraud. Just saying it wold be prudent to be very careful.