Portfolio HML Alternatives: LLC, i/o, flexible FICO, and more!
Last week we talked about conventional cash out refinance niche facts, this week we're going to talk about some of the flexibilities that our portfolio lending partners have available. As this week's topic is portfolio products lacking any government subsidy, these will not be Fannie/Freddie-like terms/rates, but they will kick the snot out of hard money and most private mortgages. Some of them sell on the secondary market, making relatively enhanced pricing/points/rates available, so you might get a Fannie-like interest rate, but it'll be an ARM with a point upfront, for example. Or it'll be a fixed rate mortgage with a point upfront, but a HLM-like rate. Etc.
- Bank statements for income, not tax returns. We've discussed this extensively in the past.
- Restricted Stock Units (RSUs) as income. Previously available on a one-off basis for the Google and Apple (and a few other companies) employees, now no longer just for Silicon Valley folks.
- Not capped at 10 financed properties.
- Real Estate Agents, this is your solution for your client that "should" be good to go, but can't check the Fannie/Freddie boxes, and is scared off (rightfully so) by usurious hard money. Expand your sphere of influence, and add value, by finding the solution that this high caliber client couldn't find on their own.
- Departing residence rental income can be counted in the DTI math, for house hackers.
- Title can be held in LLC, provided the LLC is not in turn owned by non-borrowers. All LLC docs needed at preapproval stage, two week turnaround.
- Foreign nationals. Will allow use of income documentation translated by an approved 3rd party. Preapprovals obviously take a while (think, several weeks of back and forth paperwork), please plan accordingly.
- Non-warrantable condos for loan amounts over $300k.
- Very flexible on FICO and derogatory credit events. Inversely, if you have great credit, you will be rewarded (unlike Hard Money).
- Most of this product line has no balloon payments, some have prepayment penalties, some have prepayment penalties that can be bought out upfront.
- Interest only options available, for those that are adventurous and want to prioritize cashflow over all else. Please be cautious about the availability and use of this tool.
- Alimony payments can be deducted from income, rather than counted as a liability.
- Alimony or child support income... is income!
- Cash out refinances available, this solves the down payment problem.
- Loan amounts well north of $2.5m, necessary in markets such as the Bay Area, SoCal, etc. Minimum loan amounts for most of these programs is in the $250k range.
- For self employed persons, use of business funds for down payment and reserves.
- If all of those flexibilities don't do the trick, we can fund loans with DTIs north of 45%, or ignore DTI and just use the cashflow of the property (no personal income docs needed at all!) like a commercial loan. Unlike a commercial loan, however, we're not going to re-underwrite it and harass you every 12 months, provided you're paying on time.
- I dare you to put us up against any Hard Money Lender in the entire state of California and see who offers better financing for folks outside the Fannie/Freddie box.
As we've been building out our niche and portfolio product line to save investors from hard money loans, previous topics discussed include 1 discount point hard money alternatives and up to 75% LTV for larger loan amount 2-4 unit investment properties in the 'jumbo' range. California Real Estate only, please.
Bookmark this page immediately, and check out the Ultimate California Mortgage Cell Phone App to get the preapproval process started, get the latest mortgage and real estate news, and go make some deals happen!
Equal housing lender. This is not a commitment to lend or extend credit. Restrictions may apply. Rates may not be available at time of application. Information and/or data are subject to change without notice. All loans are subject to credit approval. Not all loans or products are available in all states. Bay Equity LLC, 28 Liberty Ship Way Suite 2800, Sausalito CA 94965.
