Does this closesing cost make sense? What should I expect?

Member since 2025 · 8 posts · 6 votes

I'm working with one of the lenders I used to work with. He processed this loan as a Conventional but this needs to be on a DSCR loan. Does anyone expense this with United Wholesale Mortgage? And does this closing cost make sense as well? He is running my soft credit for the loan guarantee and it will be on LLC. Does this seem right?

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Clayton Silva

Lender · CA · Member since 2018 · 637 posts · 393 votes

Yes it does. There is no box in Loan Estimates for NonQM loans (DSCR is a Non Qualified Mortgage...meaning it does not get sold to Fannie or Freddie). As such, most DSCR loan estimates go out as "conventional" in the box you highlighted. Nothing out of the ordinary there.

Couple notes in case your lender did not explain it:

1) The owners of the LLC are still personally guaranteeing the loan contrary to popular belief. Despite the LLC technically being the note holder, there is still a personal guarantee.

2) DSCR loans CAN report to credit. While they may not initially, these loans get packaged up and sold to different hedge funds, servicers, insurance companies etc. When they do get sold/transferred, the new servicer may not fully read through the agreement and may report the loan to your personal credit.

3) Regardless of whether it reports to credit or not, it technically will impact DTI once reported on Schedule E for tax returns. Might be able to make the case that if it is not on credit and title is in LLC name you can omit it from DTI calc, but that is going to come down to specific lender guidelines and underwriter a lot of the time in regards to how they interpret that.

Hope this helps!

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Clayton Silva
Lender · CA · Member since 2018 · 637 posts · 393 votes
1y
Yes it does. There is no box in Loan Estimates for NonQM loans (DSCR is a Non Qualified Mortgage...meaning it does not get sold to Fannie or Freddie). As such, most DSCR loan estimates go out as "conventional" in the box you highlighted. Nothing out of the ordinary there.
Couple notes in case your lender did not explain it:
1) The owners of the LLC are still personally guaranteeing the loan contrary to popular belief. Despite the LLC technically being the note holder, there is still a personal guarantee.
2) DSCR loans CAN report to credit. While they may not initially, these loans get packaged up and sold to different hedge funds, servicers, insurance companies etc. When they do get sold/transferred, the new servicer may not fully read through the agreement and may report the loan to your personal credit.
3) Regardless of whether it reports to credit or not, it technically will impact DTI once reported on Schedule E for tax returns. Might be able to make the case that if it is not on credit and title is in LLC name you can omit it from DTI calc, but that is going to come down to specific lender guidelines and underwriter a lot of the time in regards to how they interpret that.
Hope this helps!
1 Reply
- Neela David
  OP
  Member since 2025 · 8 posts · 6 votes
  1y
  Quote from @Clayton Silva:
  
  Yes it does. There is no box in Loan Estimates for NonQM loans (DSCR is a Non Qualified Mortgage...meaning it does not get sold to Fannie or Freddie). As such, most DSCR loan estimates go out as "conventional" in the box you highlighted. Nothing out of the ordinary there.
  Couple notes in case your lender did not explain it:
  1) The owners of the LLC are still personally guaranteeing the loan contrary to popular belief. Despite the LLC technically being the note holder, there is still a personal guarantee.
  2) DSCR loans CAN report to credit. While they may not initially, these loans get packaged up and sold to different hedge funds, servicers, insurance companies etc. When they do get sold/transferred, the new servicer may not fully read through the agreement and may report the loan to your personal credit.
  3) Regardless of whether it reports to credit or not, it technically will impact DTI once reported on Schedule E for tax returns. Might be able to make the case that if it is not on credit and title is in LLC name you can omit it from DTI calc, but that is going to come down to specific lender guidelines and underwriter a lot of the time in regards to how they interpret that.
  Hope this helps!
  
  Thank you, sir, This makes more sense for now.
  0 Reply
- Clayton Silva
  Lender · CA · Member since 2018 · 637 posts · 393 votes
  1y
  Quote from @Neela David:
  
  Quote from @Clayton Silva:
  
  Yes it does. There is no box in Loan Estimates for NonQM loans (DSCR is a Non Qualified Mortgage...meaning it does not get sold to Fannie or Freddie). As such, most DSCR loan estimates go out as "conventional" in the box you highlighted. Nothing out of the ordinary there.
  Couple notes in case your lender did not explain it:
  1) The owners of the LLC are still personally guaranteeing the loan contrary to popular belief. Despite the LLC technically being the note holder, there is still a personal guarantee.
  2) DSCR loans CAN report to credit. While they may not initially, these loans get packaged up and sold to different hedge funds, servicers, insurance companies etc. When they do get sold/transferred, the new servicer may not fully read through the agreement and may report the loan to your personal credit.
  3) Regardless of whether it reports to credit or not, it technically will impact DTI once reported on Schedule E for tax returns. Might be able to make the case that if it is not on credit and title is in LLC name you can omit it from DTI calc, but that is going to come down to specific lender guidelines and underwriter a lot of the time in regards to how they interpret that.
  Hope this helps!
  
  Thank you, sir, This makes more sense for now.
  
  My pleasure! Happy to help
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Andrew Zamboroski
Lender · Member since 2021 · 495 posts · 130 votes
1y
Quote from @Neela David:

I'm working with one of the lenders I used to work with. He processed this loan as a Conventional but this needs to be on a DSCR loan. Does anyone expense this with United Wholesale Mortgage? And does this closing cost make sense as well? He is running my soft credit for the loan guarantee and it will be on LLC. Does this seem right?

Clayton was spot on with his assessment. It is hard to help evaluate the closing costs without that page that lists the costs. Unless something has changed with UWM, their loans likely still report to personal credit, even if vested in an entity. This is common for many traditional or non-qm outlets from my experience and is a good thing to check with your broker.

Cheers!
1 Reply
- Clayton Silva
  Lender · CA · Member since 2018 · 637 posts · 393 votes
  1y
  Quote from @Andrew Zamboroski:
  
  Quote from @Neela David:
  
  I'm working with one of the lenders I used to work with. He processed this loan as a Conventional but this needs to be on a DSCR loan. Does anyone expense this with United Wholesale Mortgage? And does this closing cost make sense as well? He is running my soft credit for the loan guarantee and it will be on LLC. Does this seem right?
  
  Clayton was spot on with his assessment. It is hard to help evaluate the closing costs without that page that lists the costs. Unless something has changed with UWM, their loans likely still report to personal credit, even if vested in an entity. This is common for many traditional or non-qm outlets from my experience and is a good thing to check with your broker.
  
  Cheers!
  I'll second this, the second page of the loan estimate is frankly the most important. A lot of people think they are getting a good deal based on the rate, but if you are paying exorbitant fees or points, you may not be. Curious if there is a PPP on this (PPP is illegal in some states).
  1 Reply
- Neela David
  OP
  Member since 2025 · 8 posts · 6 votes
  1y
  Quote from @Clayton Silva:
  
  Quote from @Andrew Zamboroski:
  
  Quote from @Neela David:
  
  I'm working with one of the lenders I used to work with. He processed this loan as a Conventional but this needs to be on a DSCR loan. Does anyone expense this with United Wholesale Mortgage? And does this closing cost make sense as well? He is running my soft credit for the loan guarantee and it will be on LLC. Does this seem right?
  
  Clayton was spot on with his assessment. It is hard to help evaluate the closing costs without that page that lists the costs. Unless something has changed with UWM, their loans likely still report to personal credit, even if vested in an entity. This is common for many traditional or non-qm outlets from my experience and is a good thing to check with your broker.
  
  Cheers!
  I'll second this, the second page of the loan estimate is frankly the most important. A lot of people think they are getting a good deal based on the rate, but if you are paying exorbitant fees or points, you may not be. Curious if there is a PPP on this (PPP is illegal in some states).
  
  here is the second page.
  0 Reply
Clayton Silva
Lender · CA · Member since 2018 · 637 posts · 393 votes
1y
Other than paying a lot of points AND the broker origination out of pocket, nothing too out of ordinary. Still hard to be 100% because I do not know your PPP and structure of PPP. Your post mentioned Cleveland OH at the bottom, which I know OH caps PPP at 1% which most lenders don't even have that option so it is likely that you have none on this loan. Might be worthwhile asking if they can do a 1 year 1% PPP to reduce the rate and points a tiny bit but they may not have that option. The lack of PPP is why the APR is higher is my guess. Also don't know if you HAD to buy rate down to get it to DSCR?
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