No seasoning lenders?

Question

Hi all,

I currently have three BRRRRs in Tulsa, OK and am trying to refinance them and cash out. We have only owned them in cash for two months.

Does anyone have lenders that will do a no seasoning cash out? I have quotes from a commercial lender that are 30 year fixed @ 5.425% with a prepay penalty of 5% and going down 1% every year after.

Does this sound right?? I looked at this and thought it was extremely high. He said the rates only get about .25% better if we wait 6 months but we are trying to BRRRR as fast as possible and keep going.

(Not looking for a lender but want advice on if others found better rates that these)

Chris Cambridge · Answer

Not sure why you think that is a bad quote. Don't know the details but if your credit is not 750+, cash out is more than 60% or it was asset based as opposed to full doc you should snatch that offer.

Todd Rasmussen · Answer

@Jacob Silberfarb

I got a commercial loan at 4.15% a couple months ago. It's a five year term with 20 year amortization, so your terms are better. I'd take money at 5.425% all day every day, but you might be able to do better. Since you'd be crazy to payoff a 30 year mortgage early less than five years after using BRRRR strategy, I wouldn't worry about any of that. Sounds like you should get your cash and shop around lenders between now and your next refi.

Jacob Silberfarb · Answer

Credit is good.

Yeah the more I shop around it seems it is good. Guess I am too used to Primary and Secondary mortgages. I called other places that are 5 or 10 year fixed and on a 20 or 25 year am. Seems this is the way to go with a 30 yr fixed.

Then maybe refi in 5 years.

Marty Johnston · Answer

@Jacob Silberfarb you're a perfect candidate for "Delayed Purchase" financing if you've only owned them for 24 months! This allows you to obtain "purchase pricing" vs CO Refi pricing (which always takes a hit typically). There are some lenders who allow for this and will lend 'at cost' of the original purchase price + actual rehab invested. The other benefit to delayed purchase financing is if:

1) Credit is good2) Property DSCRs well3) These are all 1-4 UnitsThen you could potentially get up to 80% LTV as well. These are with the non-bank type lenders offering 30-yr fixed terms. Rates on this money for SFH's starts in the mid to high 4's with buy downs possible into the high 3's, possibly high 4's to ow 5's on 2-4 Units with buy downs into the low to mid 4's. If you really wanna get crazy, there are hybrid amortization options as well. 30-yr terms, but I/O during first 5 yrs, then converts to 5-yr fully amortizing loan (no balloon). Maximizes cashflow and still in the 4-5% range here (again assuming good credit, DSCR 1.1+, and good location). SFH's generally get better pricing than 2-4's, so that will play affect here too.

Otherwise, what you have here is a pretty typical PML quote IMO.

Hope this helps!

Timothy Hero · Answer

It's hard to say if what you've been offered is bad without knowing your credit score. I've been seeing 30-year fixed, 75% LTV cash-out in the private sector in the 4.75 - 5% range. That's based on a 720 score, however.

Jacob Silberfarb · Answer

It is right around 720. Are you able to share what lender that is with?

Lara White · Answer

@Justin Oldham can you send me your local contacts too?  I'm always looking for good local lenders!  I have several, but it never hurts to have more.  Appreciate it!

Justin Oldham · Answer

@Jacob Silberfarb sent you a couple local guys

Caroline Gerardo · Answer

Full doc with two years IRS qualifying, DTI max 43, 740 middle FICO single family cash out 30 year fixed 4.6% 30 year fixed 4.77 APR no prepay this is not a commitment to lend, it is rates as of 9/7 at 9:52 Pacific and they change all the time.  Vested in your name

Bank statement loan 30 year fixed with 740 middle FICO, DTI not to exceed 50,  4.31 with 1.5 points no prepay APR  4.511 still beats above. Also not a commitment to lend and the rates change several times a day. Can vest in single owner LLC or your name. Impounds required for this price. May need letter confirming from CPA details.

Debt service ratio loan I can't guess as you didn't provide rents, loan amount, taxes and insurance and any HOA

rate shopping is near impossible when you need to disclose: middle mortgage FICO, property type, you can or can't qualify with IRS returns past 2 years, have some reserves and how many months, location, loan to value you want... and other factors.

Suggestion: prepay is a huge cost, try to buy out of it upfront to be flexible in the future.

Rates are a moving target they change a couple times a day, and come in increments of days (15 30 45...)  Hope this helps

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