All Forum Posts by: Hana Mori

You've gotten great advice here but one piece nobody has mentioned yet is the cost of the appraisal. $1,200 is super high in my experience. $300-600 is average if it's just a vanilla SFR, and even the last MF appraisal I had (8 units) was only $800. So $1,200 appraisal would be a red flag for me in itself. At least you paid for it and not them (?) so hopefully you can still use it if you end up switching lenders. Which also by the way my preferred lender doesn't charge for the appraisal until closing and no charge for it unless the deal closes, but I think that is somewhat rare. Honestly the high fees combined with lack of transparency and high appraisal costs, a whole month of UW (longer than normal), etc. would make me want to switch lenders right away because IME the lenders with high fees and high appraisal costs who drag their feet like this also tend to be the ones to continue delaying, have things get stuck in underwriting, say one thing while delivering another, have poor communication especially between UW and origination, bad customer service, can't close when they say they will, etc. and it can be a total nightmare. They often dangle low rates but end up overpromising and under-delivering, so you could be working with one of those. I'd push back hard for them to honor their original LTV and greatly reduce the undisclosed extra loan fees, or switch to a different lender.

 Thanks David! @Hana Mori - sorry to hear about your experience. At first glance, this does seem unexpected & not in line with how the process should go. Usually on DSCR loans, lenders will provide a preliminary cost breakdown but we usually can't pick the pencil back up and finalize terms until the appraisal report is in hand and expenses (tax/insurance/HOA figures) are finalized. It seems as if everything remained true here though so the increase in fees is certainly frustrating.

Were these lender fees or third-party fees? Is it possible that you got quoted title, insurance, escrows, recording fees, etc. that were less than the actuals? If it's the case that the lender origination/broker fee increased last minute I would not be thrilled.

Regarding LTV, are there any seasoning restrictions in play? Perhaps you bought the property less than 6 months ago, for example, and then lender just realized that and is needing to dial back leverage?

At the end of the day, DSCR loans are a moving target when it comes to your final cash out proceeds. I think the bigger question is why the LTV lowered & why lender fees are increasing.

If you have maturing debt on the property or need to deploy this cash elsewhere, I would try and see it through with your current lender & work toward a solution. If not, it may be worth shopping around for a better option (rates likely are lower since you started the process a month ago). Best of luck!

If you haven't closed, then you could seek a different lender who would accept the appraisal. You may need to spend a few hundred dollars to get a lender name change if the new lender requires that, but depending on when you rate locked you may still end up saving money with a new lower rate.

The LTV change doesn't make sense unless there was something that caused alarm to the treasury/UW team of said lender, but they should have explained/ be able to explain why to you. Lower rates with the Fed should've helped your DSCR so if anything, it should have given you more wiggle room.
The Fees are odd for it to be that big of a difference. The only logical thing I can think of is if the title company's fees weren't included in the estimates you were given, even then though 4k would still be significant for a title company to charge unless it was a very large loan.