All Forum Posts by: George Despotopoulos

Hey @Brian Webb welcome!

It really depends on the lender, 6 months seems standard for the traditional/conventional route. You may find others who only require 3 months. 

It is normal, they want to see that you can cover some payments if necessary. I've seen private lenders/hard money lenders charge up to 8 months on a 12 month loan term. Definitely different credit risk on those deals, but just to give you an idea.

Hey @Mark Wood! Can you gives us some more info on what you're looking for? Do you need funds for the rehab? How much can you put down? What's the purchase price? Etc...

With some more info we can perhaps point you in the right direction.

Hey @Mike Abramowitz -- where are these properties located?

I would say almost all lenders will require an appraisal, especially on a cash-out.

@Brandon Mix -- It depends. How bad is your credit? Any judgments, liens, foreclosures, bankruptcies in your past? If yes, how long ago?

Hard money lenders tend to care mostly about your experience in the space and the asset. But if there are overwhelming red flags in your credit report/background check, then their guidelines may preclude them from lending to you.

And, like others have mentioned, some lenders won't underwrite to you if you own less than 20%. 

While your low credit, like you mentioned, may cause your rate to go up, it shouldn't be so high that you feel uncomfortable with it. As others have mentioned, if you have a good deal you will be able to find a lender for it, so don't feel like you have limited options.

@Paul Aqua good luck Paul! Don't let your score hold you back if you're ready to invest. There are lenders out there who will consider you even if you're in the low-mid 600s. Of course the lower your score, the higher your rate, but sometimes it means getting a 7.50% or 8.25%, I know you rather not pay more than 7.5% but going up a little shouldn't kill a deal for you. You could always refi once the prepayment period is over and by then hopefully your credit should improve.

@Jonathan Streufert - as for the length in time, most non-bank lenders will do 10, 15, or 30 year terms. If you're doing hard money or bridge loans it's usually 12 months, with a fee to extend. For straight private money, it's really up to that individual lender and the borrower. Standard is 12 months, but pushing it out to 24 or 36 is not unheard of.

@Salvatore Tardio I think what @Grant Rothenburger is getting at is many lenders that operate on facebook tend to be less trustworthy. I would stick to companies that have a decent online presence outside of facebook. Also, if the terms are too good to be true, they usually are, so always check in with other people here if you're tempted to jump on an opportunity. 

There are many legit, reputable specialty finance companies, there's no need to risk anything if it doesn't feel right.

@John E Ceisel where are you investing? 

Like Chris Mason mentioned, 30YR Fixed will be a higher rate, I also think less and less are offering fixed rates now. 

Other than commercial banks, you can look to non-bank lenders (or specialty finance lenders) if you don't have income history. These lenders underwrite the loan the same way a commercial lender would, which means the primary focus is on the DSCR (1.25x). Your rate will be higher, anywhere from 6.5% - 8.5% usually, but it's another option, and you can always refi down the line.

@Mike McCarthy - depending on the agency, I think the dispute process is pretty easy. I believe it's just  an online form.

Sorry to hear that happened Angela!  People take hits all the time, so it's not the end of the world. It will definitely hurt you in the near-term unfortunately, but once a few years pass it should not matter as much if you're taking the steps to repair it now. In the interim, I would collect as much documentation around this to support what happened (around your disability, any confirmation that you applied for deferred (perhaps they have records of this they can provide to you), and anything else you think is beneficial here). That way when you apply for a loan, you can submit this either with your letter of explanation regarding your credit report where this will come up or by being proactive at the outset and letting the loan officer know.  Depending on the type of loan / type of lender they may accept the documents you provided and proceed without issue (providing you meet their other criteria).

I'm going to agree with @John Thedford here. If it's a straight buy & hold, those terms are too high. 11% and 3 points is something you see with hard money lenders, which are short term. 

We don't know enough about your specific creditworthiness to really say where you would land or if obtaining long-term financing is on the table, but typically buy & holder, non-bank, lenders like to see a fico of 600 and above (some want 650 and up), the property to have a DSCR of 1.25x, minimum loan amount of $75-$100k (depending on the lender), and you can't have any foreclosure/bankruptcies in the last 2-6 years (depending on the lender).

If you're going to rehab, even if it's nothing major, I would consider doing a bridge loan. It will be short term (12 months), of interest-only payments, and the rate would be 10%-14% depending mostly on the LTV, your FICO, and your experience. Once you fix it up and rent it out, you can refinance (with no pre-payment penalty) into a longer term loan at hopefully 7%-9.5% and 1-2 points at closing.

@Stephanie P. makes some great points. 

@Felix Rivera If there are any doubts about the financing side or this particular loan, definitely better to wholesale! Never want to be in a bad position with a lender.