All Forum Posts by: Brittany Minocchi

Hi Jose - 

Is the issue that you're a first time investor and/or first time home buyer? Some lenders don't allow one or the other, but there are multiple that do. Expect to need a down payment of 20-25% with a DSCR loan depending on the property type and your FICO. Most lenders don't report to your personal credit but some of them do, so if this is important to you, be sure to ask whoever you end up working with. There are 30 year and 40 year terms available, ARM and fixed....lots of options depending on your needs! Feel free to reach out, I'm happy to connect and answer any questions you have.

Hey Bhargav - 

Are you looking for a rate/term refinance or cash out? Either way, I'm happy to discuss if you'd like to reach out, you should definitely have some options here. 

Hey James - 

It depends on whether the property is in your name or titled to an entity - many lenders that offer HELOCs on investments don't allow entities, which is a problem for some investors. I'd expect rates in the low to mid-teens depending on LTV and credit. Happy to chat if you want to connect.

Hey Olu - 

If you're concerned about the variable rate with a HELOC, I would suggest either a cash out refi or a HELOAN. A HELOAN will have a significantly higher rate than a cash out refi, but you'll need to look at your blended rate to see which option makes the most sense. If the blended rate ends up higher than what a cash out refi would get you, then I'd go with the cash out refi.

Hey Dean - 

Any of those 3 products you mentioned could be potential options, and I'll add a 4th as well in case it's handy for any future properties (wouldn't apply here since this property is free and clear). 

1.) DSCR: your income, employment history and DTI will not be considered, so the paperwork is lighter compared to the other 2 options. Instead, the lender wants to see that the monthly income from the property can cover the principal, interest, taxes, insurance and HOA (if applicable). Rates are slightly higher than conventional loans right now. 100% of your rental income is used to qualify you with most lenders. This loan type has a prepayment penalty unless you buy it down or the property is in a state that has certain rules (sometimes lenders prohibit them in certain states and you're forced to buy it out, which will increase your interest rate). You can close in an LLC if that's a concern, and many times the debt isn't reported to personal credit. This comes in handy for any future conventional financing you might apply for.

2.) HELOC: they are out there, but you typically have to hold title in your name and not under an entity. 70% LTV is usually the cap, and rates are double digits (mid teens). This is a line of credit, so you can make draws over a set period of time and are only charged interest on what you use. Full documentation to qualify, including employment history, income and DTI.

3.) Traditional financing: Full documentation needed to qualify. No prepayment penalties. Likely the lowest interest rate of all 4 options. 75% of gross rental income will be used to qualify you. 

4. HELOAN: Second position, lump sum loan. Rates will be comparable to an investment HELOC (likely slightly lower) but are fixed, not variable. Multiple income documentation options - full doc, 1099, bank statement, DSCR, etc. These have prepayment penalties as well. For those who cannot qualify for traditional financing and don't want to mess with their first mortgage by doing a cash out refi, this is an ideal option.

If you can qualify, traditional financing is going to give you the best rate in terms. Otherwise, I'd say a DSCR cash out refi, then a HELOC.

Hey Adrian - 

There aren't many options out there for investment HELOCs, and the ones that are available will be full doc...meaning income, employment and DTI are used to qualify you. It sounds like your best options are either a DSCR cash out refi, or a HELOAN. HELOANs are very similar to a cash out refi in how they're structured, but they do not affect your existing mortgage. A cash out refi would replace your current mortgage (and its rate) with a new one. Both a cash out refi and a HELOAN have options to qualify you based on FICO and the income from the property - your income, employment and DTI are not factors in this case. Biggest downside is that they have a prepayment penalty, so that's something you'll want to consider if you think you might want to refinance in the next couple of years. 3-5 year penalties are common, but you can choose to buy it down to a shorter period of time if you'd like. The longer the penalty, the lower your rate. Interest rates on the DSCR cash out arent that far off from conventional financing right now, but the HELOAN rates will be a good bit higher. Hope that helps! If you have any questions or need anything, please feel free to reach out. 

Hey Sandra! 

Are you looking for financing on a primary home or investment property? Feel free to connect. 

There are HELOCs for investment properties, but they typically require that the property is titled to an individual and not an entity which is problematic for many investors. LTV is typically limited to around 70% and rates are in the double digits. HELOANs will be a bit more competitive, but they are lump-sum and don't allow for draws.

Hey Roberto - 

I personally would only pull the down payment from the HELOC just to lessen the risk associated with leveraging your personal home. People do it both ways, it depends on your risk tolerance and how much equity you have to work with. Happy to chat if you have any questions, feel free to reach out.

Hey Arman - 

If you're open to living in it for at least a year, owner-occupancy will be the lowest down payment option. If you don't want to occupy, there are other options that look at the income potential of the property and do NOT factor in your income, employment history or DTI but you'll have a significantly higher minimum down payment - plan on 20% to be safe. Income, employment and DTI would be factors with an owner occupied loan, so if you think you might have issues qualifying, making it strictly an investment property may be your best bet. Happy to chat, feel free to connect!