All Forum Posts by: Axel Scaggs

Thanks for all the info guys!

Thank you for your reply. I’m ok with just getting 75% out of my initial cash purchase, if that reduces the seasoning. I can always do a full cash-out refinance in a few years if the rates make sense.

I recently found an off-market property and was able to negotiate the price down due to foundation concerns. I plan to purchase it in cash and repair the foundation. Other than that, I will be adding a closet to a bedroom and fixing a few small things. Everything else is in good shape. My question is, are there conventional or DSCR lenders that would allow me to refinance 70-75% of just the initial purchase price, not the ARV, with no or little seasoning? I have a few other properties I'm watching and would hate to have a large chunk of my funds tied up for 6 months. I'm talking with one lender that seems promising, but if anyone knows a good lender, I'm open to suggestions. I'm in north Texas.

Quote from @Jay Hurst:

Quote from @Axel Scaggs:

Quote from @Patrick Roberts:

Quote from @Axel Scaggs:

Quote from @Alan Lacey:

I would certainly recommend shopping that around a bit just to make sure that is best available. Assuming dscr because that would be too much in fees to be allowed on a conventional deal

It is a conventional cash-out refinance on an investment property I own. My W-2 was required to meet dti.

I actually went through a broker recommended here by several people on BP. 

This is conventional? Yeah, you definitely need to get another quote. This would be reasonable for a DSCR with a short PPP and FICO below 700. If this is conventional, the lender fees are ridiculous.

This loan should be somewhere around 7.125 - 7.375 at worst with a decent FICO while going borrower-paid. I could see this quote being realistic if it was lender-paid and you werent having to pay the broker out of pocket. Total loan fees (not including broker commission) should be at or under $2,500; maybe $2,700 at worst. Even below 700 FICO, you should be at or under par at 7.5% on borrower-paid and under 75% LTV, not paying points.

I appreciate the the feedback. My FICO is a 770 and the LTV I believe was over 75%. It’s unfortunate, but I guess I learned the importance of shopping around as I only talked with one other lender. If I’m locked into this, I’ll just be much more careful in the future.

 @Axel Scaggs  You are NOT locked in until you sign the closing documents. Assuming you credit score is 770 that is an awful loan, and you should NOT close with those terms. 

Ok thank you for the advice, I’ll look elsewhere. What is a generally expected closing cost on a loan of that amount? I was expecting $7-10k. Second, would this lender modify the fees if I presented a competing offer? Or is that not a typical thing to do.

Quote from @Patrick Roberts:

Quote from @Axel Scaggs:

Quote from @Alan Lacey:

I would certainly recommend shopping that around a bit just to make sure that is best available. Assuming dscr because that would be too much in fees to be allowed on a conventional deal

It is a conventional cash-out refinance on an investment property I own. My W-2 was required to meet dti.

I actually went through a broker recommended here by several people on BP. 

This is conventional? Yeah, you definitely need to get another quote. This would be reasonable for a DSCR with a short PPP and FICO below 700. If this is conventional, the lender fees are ridiculous.

This loan should be somewhere around 7.125 - 7.375 at worst with a decent FICO while going borrower-paid. I could see this quote being realistic if it was lender-paid and you werent having to pay the broker out of pocket. Total loan fees (not including broker commission) should be at or under $2,500; maybe $2,700 at worst. Even below 700 FICO, you should be at or under par at 7.5% on borrower-paid and under 75% LTV, not paying points.

I appreciate the the feedback. My FICO is a 770 and the LTV I believe was over 75%. It’s unfortunate, but I guess I learned the importance of shopping around as I only talked with one other lender. If I’m locked into this, I’ll just be much more careful in the future.

I may be too far along in the process to back out now. I’m not super familiar with refinances, but I’d assume there’s a grace period to pull out and I have probably passed that by now.

Quote from @Alan Lacey:

I would certainly recommend shopping that around a bit just to make sure that is best available. Assuming dscr because that would be too much in fees to be allowed on a conventional deal

It is a conventional cash-out refinance on an investment property I own. My W-2 was required to meet dti.

I actually went through a broker recommended here by several people on BP. 

Quote from @AJ Exner:

Quote from @Axel Scaggs:

Quote from @Patrick Roberts:

Couple questions -

What's the rate and remaining life of the $130k first position?

For the closing costs, how much of that was escrows? If you're currently escrowing with the existing first lien, you would be refunded the balance of that escrow account about a month or so after closing on the new loan.

 The original loan rate was high, at 8.75%, new rate is 7.5%. House was purchased in 2017, so restarting it has certainly affected things in that regard. I attached images of the closing costs. 

$10k in Origination is tough, ~3.5 points + lender fee sounds like did the heavy lifting, plus title/prop tax in TX can add up quickly.

As for the numbers, I think its easier to regret not selling in the short term, but the hope is for long-term gains/appreciation. If they can cover your mortgage and you can slowly payoff a 350k property over time, that should give you a good equity position in no time.

Plus, if rates get better that will always help. 30k-40k + Cash-out proceeds should put you in a great spot to snatch up a few of those 30-50k properties to fix up and scale.

I wouldn't be upset, sounds like you are in a good spot.

 Thanks so much for your feedback! I suppose I’ll just be happy retaining the original asset and see what I can do to build with the funds I’ve taken out. 

Quote from @Patrick Roberts:

Couple questions -

What's the rate and remaining life of the $130k first position?

For the closing costs, how much of that was escrows? If you're currently escrowing with the existing first lien, you would be refunded the balance of that escrow account about a month or so after closing on the new loan.

 The original loan rate was high, at 8.75%, new rate is 7.5%. House was purchased in 2017, so restarting it has certainly affected things in that regard. I attached images of the closing costs. 

I recently started the process of doing a cash-out refinance on my single investment property. It cash-flows at $700 a month. Mortgage balance is $130,000. Appraised at $357k, although past appraisals have been higher. The max amount they approved to be pulled out was $123k. This makes the property break even. I only have $30-40k though, so I’ve felt stuck with this single property.

I wanted to use the cash to do some fix and flips and in the rare event a BRRRR presented itself early on, go that route and then continue with fix and flips. The market I'm looking at has plenty of houses in the 30-50k range that could be fixed. However, I'm wondering if I should have simply sold my investment property and used the full $220k-ish I would have had then. Was my move probably the least effective method?

P.S.: I also did not enjoy the $18k in closing on this number. Insanely high from what I was expecting.