Can borrower re-coup monies invested at the time of purchase via a limited cash-out refinance?

This can be considered. If the borrower paid cash for a property to facilitate the purchase of the subject property because time was of the essence and then immediately submits a refinance application to recoup these funds, the lender should document the source of funds utilized to purchase the property as well as provide a copy of the HUD-1. The LTV may be based on the appraised value provided that the appraiser satisfactorily addresses any issues relating to any substantial difference between the sales price and the current appraised value. This is especially true when the borrower is trying to obtain any cash over and above the borrower’s initial investment in a cash out transaction.  more