All Forum Posts by: Jon Puente

Hey Tim,

No, you should make another "excellent decision" to stay in the higher variable rate HELOC rather than switch to a lower fixed rate equity loan... (note mild sarcasm).

YES SWITCH, and dont walk.  RUN!

Hey Damon,

Its really not a ton of money either way, however Tyrek is correct.  7 years is your break-even point.  Anything after 7 years of holding this mortgage, you will make a profit with buying down your rate. 

HOWEVER, that is assuming you never refinance this mortgage or sell the house prior to 7 years.  If it was me personally, I would take the $2180 they are offering, but instead of using it to buy down the rate or discount the purchase price, just label it as a "seller credit" on the contract and pay some of your closing costs.  That way you are not waiting for 7 years to finally start profiting on that investment.  

Great Question!

Hey Rodrigo, 

There are too many factors here at play that it's hard to answer your question with a definitive answer. You need to have enough equity in the home to be able to refinance in the first place. Also, if you are looking to do a cash-out refinance on the investment property, the max LTV is 75%, so you need to at least have 25% equity to do a cash-out, and then you would need enough equity to payoff the HELOC entirely.

So how long do you wait? Until you can get a better interest rate than you have (or close enough to still cashflow) and until you have enough equity to make it happen. 

Is it the best way to do it? Yes, IF you can get an amazing deal upfront, and can do some value add to increase the value faster than waiting for market appreciation and loan pay down. Using a HELOC will backfire if you do not make your money at the buy.

Great Question!

Hey Mason,

I am currently a mortgage broker and I will say that you should run the numbers to know IF you need the assistance in the first place.  Despite what many people say, Down Payment Assistance is NOT free money.  

DPA comes in the form of higher rates or a 2nd lien on your property, meaning when you refinance or sell that home later on, you will most likely have to pay that back entirely, and it could mess you up (especially on a refi). 

If you do not need the assistance at all, and were just wondering about it, then I would just use your money and buy the home like normal, no strings attached. If you need it, then find out the parameters from several lenders because you do not want to put yourself in a bad position longer term.

Great Question!

Hey Ryan,

HELOC's do not have a seasoning requirement because you can track a paper trail of where the funds are coming from. As long as you document the new Debt to Income with having a payment on the HELOC, then you are fine. People do this all the time!

Great Question!

Hey Triston, 

I am a mortgage broker licensed in CA (as well as other states).  Here is what you are looking for plain and simple: You are looking for someone with the heart of a teacher.  Are they sharing more information with you, other than the basics of answering your questions?  Are they trying to save you money or are they just trying to make you work with them?  Do they sound excited on the phone or are they desperate and miserable? 

You also need to figure out what you are trying to accomplish because there are too many loans to talk about in a simple 30 minute interview.  Are you looking for an investment property or a primary residence?  Do you own a business or a W2 employee?  Are you a first time buyer or do you own several properties?

There is a lot of info to unpack, but I would start with what you are looking to accomplish and goals, and then choose 2-3 mortgage brokers to speak with about that subject.  The conversation will likely branch off into other subjects, but start with your goals/needs.

Hey Johanna, 

I am going to be devils advocate here and challenge you to make sure you double check your numbers.  Not saying they are impossible or way off, however residential rates right now are at 7% for a primary residence (give or take .25% either way).

Normally DSCR and NonQM loans are 2% higher than that (roughly) given the nature of how NonQM loans work, and the fact that you are buying investment properties with DSCR loans (not primary residences).

I really hope I am wrong and its just a smoking deal! If it is, I would love to know what lender you are using so I can add them to my lender list. 

Hey Greg,

You should definitely reach out to my friend John Fortier about this. He does a lot of fix and flip in that area.  I would say that its best to fix and flip, because prices are very cheap and you can normally get a great deal.  HOWEVER, if you like the idea of collecting checks every month, then buy and hold! Nothing wrong with it. 

Let me know if you want his information, just DM me.

Thanks!

Hey Bill,

Either way is not a bad plan.  You mentioned you have no plan for the money yet, so why not use a PM until you are ready to sell and have a plan with the money?  I would rather collect rent and keep that paying down the loan bare minimum, rather than sell and keep money in a bank account "waiting" for an opportunity. 

Likewise, you mentioned if you did sell then you could use that money to buy a new primary but then turn around and rent out your current primary.  But you mentioned you do not want to be a landlord anymore?  It puts you in the same exact spot as you were before. 

The answer here is whether you want to hold rentals or not, and has nothing to do with the math part.  I am a firm believer in buy and hold, but if you told me you had plans for the money then it might change my mind depending on what it is.  

Hey Eileen, 

It's possible, but not easy.  Typically you will need to get with the servicer of the loan (not the original lender), and then the buyer comes up with the difference in cash.  For example, if the home is worth 200K, but the loan is 150K, then the buyer needs to come up with 50K to do the deal. 

It's a great way to walk into a deal, especially with a low rate, but you need to get everyone on the same page which can be a challenge.

Great Question!