All Forum Posts by: Ben M.
Ben M. has started 144 posts and replied 298 times.
Post: Can you lock in mortgage/discount points on a refinance
- Houston, TX
- Posts 303
- Votes 47
Quote from @Jason Wray:
Ben,
Request a locked Loan Estimate (LE) so that you can look at the lock and see how many days it is locked for and what is the cost. You can also look at the fee's in general and are you having to pay points? (If you have good credit, then you should not have to pay).
When you lock a rate you select the number of days for the lock. That rate and cost are locked in unless there is a "Change in circumstance" like appraisal comes in less, LTV Change. If you exceed the days of the lock the lender must extend the rate lock for a cost - in most cases cost to you unless its their fault and they might cover.
Alwasy best to shop around first or during for a second review on costs.
Thank you Jason. The appraisal came in 1% less than we thought. The house was appraised 296500 instead of 300000. Is this enough change to add 2k to the cost of my discount points that was supposed to have been locked in?
Post: Can you lock in mortgage/discount points on a refinance
- Houston, TX
- Posts 303
- Votes 47
When doing a cash out refinance and the lender says they locked in your rate, did the cost of your mortgage/discount points also get locked in or is that going to fluctuate until closing?
Post: Refinancing initial quote vs final pricing
- Houston, TX
- Posts 303
- Votes 47
Quote from @Cristian Toaca:
Quote from @Ben M.:
Quote from @Cristian Toaca:
Texas licensed lender here.
Not very fair practice for a lender to not honor their locks. I would look into it further. Decent practice is for the locked rate to be honored no matter how aggressively the rates go up. (Assuming transaction closed on time without the need to be relocked).
Let me know if you have any questions.
Yes, in this case yes.
Because the fact that the appraisal came less - it changed the LTV. (Loan To Value).
And every 5-10% in LTV change has its effects on pricing. The lower the appraisal comes - the higher the LTV turns out to be. So yes, there is nothing to worry about in this case as long as they priced you fairly to start with.
Let me know if you have any other questions! :)
Post: Refinancing initial quote vs final pricing
- Houston, TX
- Posts 303
- Votes 47
Quote from @Cristian Toaca:
Texas licensed lender here.
Not very fair practice for a lender to not honor their locks. I would look into it further. Decent practice is for the locked rate to be honored no matter how aggressively the rates go up. (Assuming transaction closed on time without the need to be relocked).
Let me know if you have any questions.
Post: Refinancing initial quote vs final pricing
- Houston, TX
- Posts 303
- Votes 47
I am in the middle of a cash out refinance and was told my rate would be locked. However, the final closing cost is 4k above the initial quote. The rate did get locked but the origination fee went up 2k from the initial quote and they said this is because rates are going up drastically. Does this make it right for them to raise the origination cost by 2k though? Their original quote also only had 2 months of prepaid taxes and the final quote has 7 months of taxes and this also added another 2k. Was this a bait and switch tactic? It is probably common with lenders?
Post: Refinancing to purchase an investment property
- Houston, TX
- Posts 303
- Votes 47
Quote from @Landon Bleau:
Is the money you're going to make off investing the $98K more than the difference in payment? I would definitely think so as long as you're able to find a good deal/deals, so I would say go for it.
Post: Refinancing to purchase an investment property
- Houston, TX
- Posts 303
- Votes 47
Lender has confirmed I can borrow 98k from my primary residence by doing a cash out refinance and loan would go from 127k to 240k. I am planning to get my second investment property. The issue I am having is that the loan would be stretched back out from 20 years left to 30 years and the interest rate would go up a bit (4.25% instead of 4%). Does it still make sense to do this?
Post: Tax increases killing cash flow
- Houston, TX
- Posts 303
- Votes 47
Quote from @Brian Ellis:
Stick to increasing rent. Month to month (tenant at will) you can technically increase it every month. There is a housing crisis where I’m from. Nobody is going to jeopardize losing their rental over $25.
Keep your lease agreements short IMO
Thank you Brian. My monthly payment went up to $86 mainly from county and school tax charges. Are you seeing this much of an increase as well?
Post: Tax increases killing cash flow
- Houston, TX
- Posts 303
- Votes 47
Quote from @Scott Johnson:
Quote from @Ben M.:
Quote from @Scott Johnson:
@Ben M.cash flow is taxable income. The depreciation and refis after loan pay down are tax free.
If cash flow is low, flip your strategy to break even on cash flow (could get a 15 year loan to increase the payment). This maximizes your interest write off, loan pay down and depreciation. This is a tax averse strategy I use to offset taxable income.
Not at this point, @Ben M., but I’m writing a blog article that I’ll link when it’s posted. The only bad part about this strategy is that you don’t get the immediate gratification of cash flow. Since the loan is being paid down, though, that replaces cash flow and you capture it every few years or so when you refinance.
It’s technically a “reverse cash flow” or “tax averse” strategy. It’s more about keeping the money you’re making from your job (depreciation lowers your taxable income) than it is about increasing cash flow and making more taxable income.
“It’s not how much money you make, but how much you keep.” — Robert Kiyosaki
Would love to see the article when ready. Thank you Scott!
Post: Tax increases killing cash flow
- Houston, TX
- Posts 303
- Votes 47
Quote from @Scott Johnson:
@Ben M.cash flow is taxable income. The depreciation and refis after loan pay down are tax free.
If cash flow is low, flip your strategy to break even on cash flow (could get a 15 year loan to increase the payment). This maximizes your interest write off, loan pay down and depreciation. This is a tax averse strategy I use to offset taxable income.