All Forum Posts by: Robert Sepulveda

Good question.

Every rate has a cost to it for all government and conventional loans. For example:

So a rate of 4.25% may be today's rate with zero $0 cost (Par pricing).

Then, hypothetically, 4.125% rate may be had for .25% cost (origination points) charged to you . So that would cost you $250 for every $100,000 you borrow. When people talk about buying down to a lower rate, that is the cost to buy the lower rate.

I'm saying, if the rate you're looking for has a .5% or more cost to it, then don't hold your breath on the market moving enough to make it a zero cost (par) rate. But with things so volatile, it can change quickly.

Hopefully that all makes sense

no problem. 

I reread my post and wanted to clarify: I would "NOT" expect to gain 1/2 (.5)% or more in cost for any particular rate any time soon. I forgot the "NOT"

Good idea. The last couple of days have been opening with the rates down, but by mid morning, they start going up again. I locked today cheaper than the rates where yesterday, even though they closed higher overall today. You can pass that on to your originator. 

With that in mind, you can track rates at a more real time basis here:

http://www.mortgagenewsdaily.com/mortgage_rates/

Ask your guy when his rates open up in the morning (chicago or ny time) and compare first thing. If it's cheaper than today and you can live with the rate, lock it. If you're more than 1/2% of cost away from the lower rate, I would expect to get that back unless a big event happens in the market.

Your last paragraph hit the nail on the head. The loan was likely qualified using 75% of the existing rents. However, that is conditioned on the rental market survey with the appraisal coming in at an average at or above the current rents. It sounds like were maxed out on their dti if they can't still qualify. They should just be able to get credit for 75% of the lower rental rate.

Definitely a good idea. Do your renovations, and at the 6 month mark, refinance out of your FHA loan so that a new appraisal can be used. Make sure you have a strong value so the new loan is at 80% of your new value to avoid mortgage insurance. A good broker/banker should be able to help value your property before you pay for an appraisal.

sorry for typos'

lock right away. I've been following rates for years and this climate is too volatile to try to regain too much cost on any particular rate. Toady is a good day to lock. if not, i would lock within the next 5-7 days on any good dip that your banker/broker can track. I have multiple clients with the exact same scenario as you and today is the first day worth locking in a while. But be very careful on floating your rate, you could get stuck paying a higher rate or more points if you or your originator make a choice to wait too long.

Make sure every communication and document you create and send is in the name of the llc. You still sign the lease in the name of the llc. you should only have it out of the llc for a month if you let the lender handle all the title work. 

2nd the regular refi; you can have the title company the bank works with handle the deeds, and it can be all done within the regular amount of time it takes to refinance. The fixed rate is more important if you're looking to solidify your cash flow and build equity.

do a 30 year and set up biweekly payments. It doesn't cost you any more per month and reduces your term, therefore you interest, by about 5 years or so depending on your situation. Consider doing the same on a 20 year loan and you'd get very close to a 15 year term out of it without the 15 year payment. But definitely use the velocity of money theory to keep the cashflow moving in the direction that creates equity and cashflow - buy more assets.