All Forum Posts by: Jason Wray

 Eliott,

Was that on a cash out refinance?  Have you looked at Portfolio options?

MT,

If you already have them in an LLC and carry a sufficient umbrella policy your in good shape. My advice would be to not worry about rates right now and tap into that equity while its on the plus side. If you want to increase your position you should be using that equity to buy more doors/REI. More doors means more passive income and more equity down the road for a stronger portfolio.

You cannot be afraid of these rates right now they will eventually drop and start to ease back down.  It may take 18-24 months but why sit on the side lines and watch everyone buy more real estate.  You can always refinance into a lower rate in 2-3 years.  Get the money now and use the equity while its on the positive side and the market is still doing well.  Focus on the long game and for retirement not so much the current rate enviroment.

So a cash out refinance may not be a bad idea and you can close in an LLC with the DSCR programs!

Luis,

You have the $52K in the Heloc so I would say use it now for a down payment and jump into an investment property.  You only need 15% down so make the move and get into a rental sooner then later.  I would start looking for homes that need a little TLC up to the $200K price range.

I would also reach out and get a pre-approval from the bank to go over options.

David,

The advertisement you heard was for the DSCR loan which is a Non/QM program that uses the rents to qualify and not your personal income. I would strongly suggest reaching out to a bigger bank or top lender to get a quote. I have never heard of that company not to say its not closing loans but you will save money with a bigger Bank or a "Correspndent Lender" who will not have to charge broker fee's.

Smaller brokers and lenders do not close enough Non/QM volume to have prime pricing so the rates are generally higher.

Start with a Primary residence purchase and use a DPA - Down Payment Assistance Program. Once you havve built up enpugh equity you can use HELOC or do a cash out refinance. You may have to reimburse the DPA if you pull it out the first year or two. Its a great way to get into the REI game without having the cash needed for a DP or the closing costs.

AJ,

Those rates are high in comparison to other banks especially if you compare them to a Fully Delegated Banks Portfolio Program. Depending on the the occupancy type if you are talking about Second Homes, or Investment properties the down payment should be 5% for Second Homes 95% LTV and 85% LTV with 15% down for SFR or (2-4 Unit) multi-family rental purchases.

A true Portfolio rate is actually 2-3 point's under what you have listed above. Those rates lean a little more towards Non/Qm and lower fico's scores. Unless your pricing with a mortgage broker, mortgage lender then they are accurate. A bigger FDIC bank that offers a true portfolio is well under that rate margin and much lower in down payment in order for the portfolio to be a NICHE program.

Go the #2 route if you want to stay liquid and build wealth use the banks money! Especially now that we are about to experience a property value shock in the next 12-24 months. (In most areas). Use the down payment wisely if it does not benefit the rate/payment do not put more down. Recoup the funds after the renovations/ARV and lock in the lower rate for the long term hold.

Rates are a little shockng right now but not for the long term investors.  In the long game they are irrelevant and can be refinance in 2-3 years when the players in the GOV/FED change hands.  

Sell the house fast and get out of the debt that looks like may ruin your credit and future buying potential. Cosider it a learning curve and next time use a cash out refinance or LOC not a credit card. It would make more sense to use hard money over a 18% credit card especially considering when you Max out any credit card(s) your scores will always drop.

This can also trigger other credit cards to reduce credit limits...

Yes, Under a DSCR program it is processed as a delayed financing using the total purchase price plus all renovation/repair costs (Reciepts provided) and you can use 75% of that total value to get cash out.

Andrew,

If you plan on investing a HELOC is not the best choice for multiple reasons. They are good for the rainy day or the "what if factor" pretty much like a credit card. If you are going to be using if for buying more REI there can be some road blocks which can arise after application/appraisals. A HELOC is an open end mortgage again same as a credit card. They carry a credit risk and are viewed as a liability never as an asset or liquid reserves required when purchasing additional REI.

The other issue is at any time the HELOC can be closed or reduced if your credit score drops or your debt to income ratios increase. Just like a credit card the bank/lender who holds the heloc will monitor your credit. On a cash out refinance its tax free, and you keep it in your bank where its there when you need it without risk. It actually can be used as a qualifying asset and PITI reserves required for additional REI during underwriting.

Plus cash in hand is king where it can be used to put more earnest money down on a contract for an aggressive offer or down payment.