Are there any cash out refi options at 80/20 LTV?

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Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
2y

It's not 2021 any more, at this point most things you can make up out of thin air, some lender will do.

The question is if you want to pay the corresponding rates and fees....

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  • Timothy Hero
    Lender · United States · Member since 2020 · 1k+ posts · 499 votes
    2y

    I know of one lender, assuming you're seeking DSCR.

    0Reply
  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 664 votes
    2y
    Quote from @Michael Nelson:

    I have a few deals coming down the pipeline and want to free up as much capital as possible.

    senario 

    property appraised value 430,000

    amount still owed 220,000


     Hi Michael, You have so many options in this scenario, especially locally in CT.

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    2y

    It's not 2021 any more, at this point most things you can make up out of thin air, some lender will do.

    The question is if you want to pay the corresponding rates and fees....

    2Reply
  • Jay HurstBusiness Member
    Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
    2y
    Quote from @Michael Nelson:

    I have a few deals coming down the pipeline and want to free up as much capital as possible.

    senario 

    property appraised value 430,000

    amount still owed 220,000


     Sure, but why?  You will pay half of the extra 5% in  additional upfront fees not to mention the rate being higher as well. Using your numbers above you would still net 102,500 minus costs at 75%

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  • Michael NelsonPro Member
    OP
    New London County, CT · Member since 2021 · 54 posts · 18 votes
    2y
    Quote from @Jay Hurst:
    Quote from @Michael Nelson:

    I have a few deals coming down the pipeline and want to free up as much capital as possible.

    senario 

    property appraised value 430,000

    amount still owed 220,000


     Sure, but why?  You will pay half of the extra 5% in  additional upfront fees not to mention the rate being higher as well. Using your numbers above you would still net 102,500 minus costs at 75%

    Great point Jay, I guess a better question may have been how much more will it cost to do 80/20 vs 75/25

    Thank you for your insight

    0Reply
  • Michael NelsonPro Member
    OP
    New London County, CT · Member since 2021 · 54 posts · 18 votes
    2y
    Quote from @Chris Mason:

    It's not 2021 any more, at this point most things you can make up out of thin air, some lender will do.

    The question is if you want to pay the corresponding rates and fees....


     Thank you Chris for the quick response, How many more points and what rate % higher are you seeing on 80/20 vs 75/25

    0Reply
  • Michael NelsonPro Member
    OP
    New London County, CT · Member since 2021 · 54 posts · 18 votes
    2y
    Quote from @Devin Peterson:
    Quote from @Michael Nelson:

    I have a few deals coming down the pipeline and want to free up as much capital as possible.

    senario 

    property appraised value 430,000

    amount still owed 220,000


     Hi Michael, You have so many options in this scenario, especially locally in CT.


     Hi Devin, Thanks for the quick response what is the difference in How many more points and what rate % higher are you seeing on 80/20 vs 75/25 here in CT.

    0Reply
  • Michael NelsonPro Member
    OP
    New London County, CT · Member since 2021 · 54 posts · 18 votes
    2y
    Quote from @Timothy Hero:

    I know of one lender, assuming you're seeking DSCR.


    Im open to either DSCR or conventional Timothy really depends on the terms. I know DSCR is generally higher.

    0Reply
  • Jacob Sherman
    12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes
    2y

    yes there are definitely options out there offering upto 80% cashout as long as the rent covers the mortgage even or better . What are the rents looking like ? 

    0Reply
  • Michael NelsonPro Member
    OP
    New London County, CT · Member since 2021 · 54 posts · 18 votes
    2y
    Quote from @Jacob Sherman:

    yes there are definitely options out there offering upto 80% cashout as long as the rent covers the mortgage even or better . What are the rents looking like ? 


     Rents are currently under market one by a bit and the other by a decent amount 

    1 unit is 1600 the other is 1850. Market rent for each is 1950-2100 (the 1600 tenant was there when I bought it and super low rent but great tenants so i made a plan with them to raise it to market over the next three years as the jump would be way to much all at once). mortgage currently with insurance and taxes escrowed is 2100.

    I have a really low rate which makes this decision hard but the equity would help me fund the next 2-3 deals and enable me to start scaling faster

    0Reply
  • Brayden Hrycko
    Lender · Allentown, PA · Member since 2023 · 207 posts · 38 votes
    2y

    Hey @Michael Nelson,

    There are 80% cash out options. It would still depend on your credit score/properties performance to qualify. I'd be happy to take a look at your scenario. 

    0Reply
  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    2y
    Quote from @Michael Nelson:

    I have a few deals coming down the pipeline and want to free up as much capital as possible.

    senario 

    property appraised value 430,000

    amount still owed 220,000


    Maxing out your LTV is going to make your rate go through the roof and may compromise your ability to max it out. It's a math problem more than a qualification problem, but you may want to cap your loan amount to get a better rate (and cash flow) vs maxing out and having a little more cash, but really bad cash flow.

    1Reply
  • Jacob Sherman
    12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes
    2y

    Investor is cashing out to get into the next deal . the 1% difference in rate won't make break the deal is the money is being used to make more money in new deals . Thats real estate

    0Reply
  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 664 votes
    2y
    Quote from @Michael Nelson:
    Quote from @Devin Peterson:
    Quote from @Michael Nelson:

    I have a few deals coming down the pipeline and want to free up as much capital as possible.

    senario 

    property appraised value 430,000

    amount still owed 220,000


     Hi Michael, You have so many options in this scenario, especially locally in CT.


     Hi Devin, Thanks for the quick response what is the difference in How many more points and what rate % higher are you seeing on 80/20 vs 75/25 here in CT.


     its contingent on the rents, credit score, etc. happy to talk detail if you need

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  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    2y
    Quote from @Jacob Sherman:

    Investor is cashing out to get into the next deal . the 1% difference in rate won't make break the deal is the money is being used to make more money in new deals . Thats real estate


    I get that he's cashing out to get the next deal. In the DSCR world, there's more than a 1% difference between a 70% cash out refinance and an 80% cash out refinance and with that increase, the rents may not carry the mortgage payment at 1.25%. If he's right about the escrows, it may, but like I said, it's math; it may work and it may not work. That's lending.

    0Reply
  • Jacob Sherman
    12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes
    2y

    You don't need a 1.25. you need a 1.0 . Are you a broker for DSCR or a direct lender ? Thay may be where our disconnect is . Depends who your takeouts are that you sell to . If you're at 1.25 dscr for 80% I can assist you with an outlet for 1.0 at 80% . Theres about a 1% difference . Also at 70% ltv you can be no ratio or at 1.25 and the pricing changes . You and i should hop on a call and compare pricing and scenarios

    0Reply
  • Andrew Zamboroski
    Lender · Member since 2021 · 495 posts · 130 votes
    2y
    Quote from @Michael Nelson:

    I have a few deals coming down the pipeline and want to free up as much capital as possible.

    senario 

    property appraised value 430,000

    amount still owed 220,000

    I think Jay had a great summary on this one. 80% can be more than a full percent of a difference compared to 75% in terms of rate. In addition, costs are usually higher. Unless you need the additional money or the gains outweigh the costs, you may want to do a more conservative 75%. 
    0Reply
  • Timothy Hero
    Lender · United States · Member since 2020 · 1k+ posts · 499 votes
    2y
    Quote from @Chris Mason:

    It's not 2021 any more, at this point most things you can make up out of thin air, some lender will do.

    The question is if you want to pay the corresponding rates and fees....


    Very true, especially since the DSCR space isn't regulated. Lenders can virtually market anything. I know of one lender doing 80% LTV cash-out, but going from 75% to 80% caused the rate to go from 7.5% to 8.3%. Luckily, they don't charge origination, but that extra 5% LTV comes at a costs.
    0Reply
  • Michael Shea
    Lender · Glastonbury, CT · Member since 2023 · 7 posts · 2 votes
    2y

    I can help you with a cash out refi - I can help with DSCR or traditional lending. I am local. Office is in Glastonbury and I live in West Hartford. Please let me know if you would like to meet in person. Michael Shea - Total Mortgage

    0Reply
  • Michael NelsonPro Member
    OP
    New London County, CT · Member since 2021 · 54 posts · 18 votes
    2y

    Thank you all for your quick response. I have saved your info and will contact you soon. The new roof is going on in about a month. Which I want to do before the cash out refinance.

    0Reply
  • Michael Shea
    Lender · Glastonbury, CT · Member since 2023 · 7 posts · 2 votes
    2y

    Sounds good we can sit down and have a coffee anytime

    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2y
    Quote from @Michael Nelson:

    I have a few deals coming down the pipeline and want to free up as much capital as possible.

    senario 

    property appraised value 430,000

    amount still owed 220,000


    You can do 80% LTV cash out however the rate will be high. Expect high 8 to 9%.

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  • Joe Dillamore
    Lender · Greenville, SC · Member since 2023 · 39 posts · 6 votes
    2y

    @Michael Nelson On a purchase, 80% is doable. On a cash out refinance, lenders are more conservative. If I were you, I think you'll be spinning wheels trying to get 80%.

    0Reply
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