refinancing investment properties

7 Replies

I'm in the process of refinancing an investment property.

The current loan amount is 110K @ 5.125 fixed 30 years

I'm getting it refinanced at 115K @ 4.25 fixed 30 years

I will be saving around $50/month in mortgage payments

Notice the loan is ballooning by 4K because of all the fees.  It will take around 7 years to break even.

My loan amount is 115K.   I got appraised at 190K which is off by 20-30K.

Nonetheless my LTV (loan to value) is at 60%

All of sudden the lender wants to charge an extra $300 because the LTV is not closer to 52% LTV.

60 LTV is really really good. I've never heard of a lender who wants to charge more because LTV is at 60!

None of this was presented to me upfront. I'm guessing if the LTV was 65 or higher, he would have said, I need to charge an extra $600 or something like that?

Is this common practice?   Or is this shady as hell?

:))) it may be just a bad way to charge you $300 more, they will find the reason to do that as you would not be fighting too hard few days before closing By the way, why don't you get cash out during refi ?
I would ask for a copy of the appraisal (you the consumer is entirely entitled to do so) and talk to a few more refutable lenders. Definitely seems shady! I would tell them to provide the appraisal ASAP and I will be shopping around. LTV for rental refi's in my experience has been 75% for consumer loans and at the worst 65% for commercial loans or blanket loans. The best I was able to get was 80% 5 year term from a small local bank.
@Joe Kim  Was the LTV requirement communicated to you early on?

Definitely get a copy of the appraisal. It is your right.
Do you have a GFE from the banker?
Have them document the additional fee and give you a new GFE. Ask them what would happen if you want to proceed, but not pay the fee.

If they are charging you the fee to keep the rate, then it might be that they picked a lender that wants the lower LTV. And they need to pay a small fee to buy down the rate due to the higher LTV.

Good Luck.
Upen Patel
Originally posted by @Joe Kim :

I'm in the process of refinancing an investment property.

The current loan amount is 110K @ 5.125 fixed 30 years

I'm getting it refinanced at 115K @ 4.25 fixed 30 years

I will be saving around $50/month in mortgage payments

Notice the loan is ballooning by 4K because of all the fees.  It will take around 7 years to break even.

My loan amount is 115K.   I got appraised at 190K which is off by 20-30K.

Nonetheless my LTV (loan to value) is at 60%

All of sudden the lender wants to charge an extra $300 because the LTV is not closer to 52% LTV.

60 LTV is really really good. I've never heard of a lender who wants to charge more because LTV is at 60!

None of this was presented to me upfront. I'm guessing if the LTV was 65 or higher, he would have said, I need to charge an extra $600 or something like that?

Is this common practice?   Or is this shady as hell?

(I am a lender) pricing is determined by LTV if your appraisal comes in lower and LTV is higher theres more risk and a premium is due for that given risk. Try lowering a lenders risk, you'll get better price, I guarantee it.

Originally posted by @Albert Bui :
Originally posted by @Joe Kim:

I'm in the process of refinancing an investment property.

The current loan amount is 110K @ 5.125 fixed 30 years

I'm getting it refinanced at 115K @ 4.25 fixed 30 years

I will be saving around $50/month in mortgage payments

Notice the loan is ballooning by 4K because of all the fees.  It will take around 7 years to break even.

My loan amount is 115K.   I got appraised at 190K which is off by 20-30K.

Nonetheless my LTV (loan to value) is at 60%

All of sudden the lender wants to charge an extra $300 because the LTV is not closer to 52% LTV.

60 LTV is really really good. I've never heard of a lender who wants to charge more because LTV is at 60!

None of this was presented to me upfront. I'm guessing if the LTV was 65 or higher, he would have said, I need to charge an extra $600 or something like that?

Is this common practice?   Or is this shady as hell?

(I am a lender) pricing is determined by LTV if your appraisal comes in lower and LTV is higher theres more risk and a premium is due for that given risk. Try lowering a lenders risk, you'll get better price, I guarantee it.

Can you explain in more detail and address my question. What is wrong with a 60% LTV!!!

Who cares if the lender expected a LTV of 52%! 60% LTV is more than good enough right?

Theres nothing wrong with 52% thats very low however that particular lender may have an adjustment below 60% LTV its probably not a fannie mae conventional product because 60% LTV or below is the best pricing you can get atleast from a LTV point of view. There must have been something else that changed and there are so many variables in lending only your lender may actually know since he/she has your file in front of their face.

Originally posted by @Upen Patel :
@Joe Kim Was the LTV requirement communicated to you early on?

Definitely get a copy of the appraisal. It is your right.
Do you have a GFE from the banker?
Have them document the additional fee and give you a new GFE. Ask them what would happen if you want to proceed, but not pay the fee.

If they are charging you the fee to keep the rate, then it might be that they picked a lender that wants the lower LTV. And they need to pay a small fee to buy down the rate due to the higher LTV.

Good Luck.
Upen Patel

No communication was given about LTV expectations. What I don't understand is 60% LTV in my mind is fantastic. I could understand that investment property requirements may be higher than primary home but 60 LTV is not good enough?

To give me a $300 surprise fee because LTV is not 52 but 60 seems outrageous to me.

someone tell me I'm crazy.  One thing that drives me crazy is these underwriters and lenders when doing real estate deals.