Looking for lenders that only require 12 months seasoning
Investor · Hammonton, NJ · Member since 2015 · 58 posts · 17 votes
Hi everyone,
Per title, I am looking for lenders that only require 12 months seasoning.
Haven't found any local banks that will work with this.
Anyone have any good leads? Trying not to rely on a 8%+ hard money lender, trying to land somewhere closer to 4-5% for a 10-15 year mortgage of about $150K.
Appreciate any leads!
@Richard S. There should definitely be plenty of places out there to go through. Start by googling local Mortgage Banks - specifically a Mortgage Bank. Reviews can be a good start although I can tell you the good guys are busy and aren't always focusing on boosting their online reviews. I would call and vet some people. Typically Mortgage Bankers are going to do their loans in house, have a wide variety of banks/lenders to sell to. Obviously that means better rates for most people but really what that means is that they will have a wide variety of program types and banks with no overlays. I would love to help you but I am not licensed in NJ.
@Richard S. Can you give me a little more detail?
Have you been living in the property or no?
Have you personally paid the mortgage on the property the last twelve months?
I am assuming someone else had a mortgage on the property under their own name and not yours. Are you possibly related to that person?
@Jeff Dulla I have a portfolio of properties, each owned by separate LLCs setup at the end of 2015. They were previously owned by a relative and gifted to these LLCs in 2015. So I have 1 year of activity for 2016 for a large portfolio of properties that are all owned free and clear.
None are owner occupied. No mortgages.
The problem is that traditional banks want 2 years of tax returns of exclusive rental activity. My past few years had activity related to previous employment that was a mix of W2 and K1 which confuses the banks and they just want to see two years of consistent rental income on my own returns.
So it isn't a worry about continuity of obligation then? At first it sounded like you were saying the banks were not liking it because you haven't been on title for longer than 12 months. Which actually shouldn't be an issue if you inherited them. I will post Fannie's guides below.
The tax returns are another issue. But maybe not an issue. Are you saying they will not give you rental income and your debt to income ratio is then too high without that income to qualify for more?
Here is Fannie:
Permissible Exceptions to Continuity of ObligationAlthough the following refinance transactions do not meet the definition of continuity of obligation, the new refinance transaction will be eligible and not bound by the limited eligibility parameters described below if any of the following are applicable:
Note: Transfer of ownership from a corporation to an individual does not meet the continuity of obligation requirement.
@Jeff Dulla I have a portfolio of properties, each owned by separate LLCs setup at the end of 2015. They were previously owned by a relative and gifted to these LLCs in 2015. So I have 1 year of activity for 2016 for a large portfolio of properties that are all owned free and clear.
None are owner occupied. No mortgages.
The problem is that traditional banks want 2 years of tax returns of exclusive rental activity. My past few years had activity related to previous employment that was a mix of W2 and K1 which confuses the banks and they just want to see two years of consistent rental income on my own returns.
Your best bet is to get a HML lender and then refinance ASAP when you are done with purchase and rehab. There are small community banks out there who will refinance w/o any seasoning as soon as your rehab is complete. Then there are other methods like owner financing and subject to.
@Jeff Dulla Thanks for the information. So if I'm understanding correctly, the 24 month requirement may not be a requirement if I find a bank willing to work with the fact they were "inherited", and I've held them over 12 months now.
@Chinmay J. Not going to go HML, I'd rather have two full years of tax returns than pay 10-12% HML rates. Totally kills the deals around here, plus I don't want to take the risk that I can't refi later.
@Richard S. There should definitely be plenty of places out there to go through. Start by googling local Mortgage Banks - specifically a Mortgage Bank. Reviews can be a good start although I can tell you the good guys are busy and aren't always focusing on boosting their online reviews. I would call and vet some people. Typically Mortgage Bankers are going to do their loans in house, have a wide variety of banks/lenders to sell to. Obviously that means better rates for most people but really what that means is that they will have a wide variety of program types and banks with no overlays. I would love to help you but I am not licensed in NJ.
@Jeff Dulla Thanks for the information. So if I'm understanding correctly, the 24 month requirement may not be a requirement if I find a bank willing to work with the fact they were "inherited", and I've held them over 12 months now.
@Chinmay J. Not going to go HML, I'd rather have two full years of tax returns than pay 10-12% HML rates. Totally kills the deals around here, plus I don't want to take the risk that I can't refi later.
If HML is cost prohibitive then you can consider some creative approaches like Seller Financing or Subject To. I absolutely hate to go through traditional govt backed loans due to myriad of paperwork that's needed, the time constraints plus most bank won't even touch properties that would need extensive rehab. If you insist on going through a bank, go with smaller community bank that does portfolio loans. Good luck...
@Richard S. For what it is worth, I am with you on this. I do not get the BLIND love for hard money, private money, etc. There is a reason it exists - to do loans that are viewed as riskier. It has it's place, but it is FAR from the end all, be all. And as the demand for investment properties has increased, prices have increased and the need for cheaper financing is only strengthened.
Yes, there are plenty of conservative banks and guidelines. But there are also plenty of banks and non-bank lenders that will lend with zero overlays. People on here have been jaded by working with realtors that didn't know what they were doing or didn't look out for their best interest. As well as terrible mortgage people that didn't know what they were doing or misled them. You need to find a good professional in NJ that you can stick with and have them help guide you through your future endeavors. There are plenty of opportunities to use conventional financing - you just need to work with someone who knows the guides.
Don't be fooled by what a lot of people say on here - there is a reason to go conventional if you can. Cheapest and most stable interest rates you can find. Don't forget the importance of long term stability as the market is certain for future contractions.