All Forum Posts by: Nick Belsky

Quote from @Stephen Williams:

Quote from @Nick Belsky:

@Stephen Williams

From what we see with our clients, if the insured is in an entity or trust, the rates will almost always be higher, sometimes significantly.  Often, the lender holding the note will require the insured to match the title or personal guarantee for the loan.  One way to find out your question about premium is to simply get quotes from another carrier in your personal name... see how they compare.  You are allowed to switch insurance companies at any time, but you must notify your lender so they can get the mortgagee info added to your new policy to ensure you stay in compliance with your note.

Some lenders may even allow the insured to be in your personal name, then have your entity or trust listed as an ADDITIONAL insured. DSCR, by the way, has had better rates than conventional for about 6 months now, at least at higher LTVs. We are seeing many pricing in the 6's now. However, typically a refi for rate only makes sense if you are getting 1.5-2% lower on rate... each deal is different, obviously, but general rule of thumb.

Cheers!

 Yea that makes this really tough. I have it in a privacy trust and the Trustee is listed on the Deed so they will only put that name on the policy. They’re also quoting $6500. 

I have already looked into DSCR Loans but I don't want to pay the closing costs to. Not even get a 1% drop

Pay closing costs?  They are nearly identical to conventional and DSCR lenders don't charge origination... it's only the $1500-$2200 for UW and Processing.  Any loan has these fees, some may bake them into the rate or not, but they are always there.  A DSCR loan does not cost more than an agency loan.  Too many people go around touting that when it is not true at all.  

Yes, most any lender will want that trust listed as the insured then.  That's a cost of doing business with a trust/entity.  The only remedy is to shop around for a better rate with the same or similar coverages.  I'd suggest checking with a few insurance brokers as well, not directly with carriers.  Check out Goosehead, Brightway, or NREIG for brokers.  If you are in a state that State Farm will write policies, they have been pricing very aggressively for entity/trust landlord policies. Maybe check with them directly.  As a note, your insurance agent matter too.  Some have no idea how to structure a policy while others are gurus and know how to structure and price them effectively.  Don't hesitate to contact more than one agent at a carrier/broker to ensure you are getting the better agent.

Cheers!

@Stephen Williams

From what we see with our clients, if the insured is in an entity or trust, the rates will almost always be higher, sometimes significantly.  Often, the lender holding the note will require the insured to match the title or personal guarantee for the loan.  One way to find out your question about premium is to simply get quotes from another carrier in your personal name... see how they compare.  You are allowed to switch insurance companies at any time, but you must notify your lender so they can get the mortgagee info added to your new policy to ensure you stay in compliance with your note.

Some lenders may even allow the insured to be in your personal name, then have your entity or trust listed as an ADDITIONAL insured. DSCR, by the way, has had better rates than conventional for about 6 months now, at least at higher LTVs. We are seeing many pricing in the 6's now. However, typically a refi for rate only makes sense if you are getting 1.5-2% lower on rate... each deal is different, obviously, but general rule of thumb.

Cheers!

Quote from @Kay Sam:

@Nick Belsky. Yes loan will be maturing in October. The numbers don't look as though it'll work for a Bridge loan or DSCR. I'm already working on an extension with my HML.

Thanks for your reply!

An extension would definitely be the most cost effective option.  Bridge loans are easy and not restricted by cash flow at all.  Not cheap either though.  With your FICO we'd be limited to 65-70LTV of the appraised value though...  Either way, the extension is your best bet.  If for some reason, they won't extend, then you may need to consider an alternative route.

Cheers!

@Michael Santeusanio

If you intend to go conventional/agency financing, then you have to wait 12 months on title to get the current value based cash out.  You can rate and term with limited cash out ($2,000 max) anytime.  

If you are looking at DSCR, then most want 3-6 months of seasoning before you can get a cash out based on the current value. Several, however, have no seasoning requirement with proven rehab work done and allow use of the current value based cash out.

Are you working with a mortgage broker who specializes in investment loans?  They can offer valuable insight into things like this.

Cheers!

@Kay Sam

I don't believe you noted if your current loan is about to mature or not... even with the lower FICO you could do a new bridge loan for cash out, depending on what leverage you need.  Then you can at least reset the maturity date while you leave on the market to sell... Doesn't work for everyone, but it may be worth at least looking into.

Cheers!

@Stevan Stojakovic

This is where finding the right lender comes into play before you go under contract.  Some lenders will only allow you to draw on completed work that is PAID in full.  Some lender will allow draw on invoices that are UNPAID.  Some even require the draw payments to go directly to the GC/Subs.  Some will allow draws either way and send directly to the borrower.  With enough experience, there are even some lenders whom will give up to 20% of the rehab budget as an advance at closing.  That way you can roll the same 20% into subsequent draws until the last one.

Lots of different structures out there that a lender require, so any flipper should discuss payment with their GC/Subs prior to getting a loan to ensure no one gets ticked off or stops work waiting for payment.

Quote from @Stevan Stojakovic:

For those who've used both: what's been smoother in practice, DSCR lending or traditional bank loans tied to income?

Lite doc loans all day every day.  Agency UW has gotten ridiculous.

Quote from @Bernard Golden:

Hi: Have several wholly-owned properties with Section 8/Housing Voucher tenants. Am interested in putting cash-out DSCR financing in place. Can anyone recommend a lender that provides DSCR financing for subsidized tenant properties? Many thanks.

Most any DSCR lender will allow Section 8 Tenants... you simply need to show the lease for the total rent due each month, the voucher showing how much the program pays and how much the tenant pays, then proof of 2 months receipt for each. If a new lease, then the deposit and first month's rents are needed. There are a few lenders that will reduce LTV for section 8 but the vast majority have no impact on terms whatsoever.

Are you working with a broker?

Cheers!

@Lior Shulstein

Delayed financing loan value basis is limited to the lower of the purchase price, appraisal, or purchase price plus actual costs.  You need to structure this differently.  We do these often with several of our clients.  

Purchase with cash, then do a very minor amount of work (maybe new appliances and some paint), then we can do a new appraisal to base the loan from current appraised value.  The "rehab" key to getting around the delayed financing part.  This way, it is seen as a cash out refi and the lenders we use have no seasoning requirements for purchases with rehab completed.  We can even go to 80LTV cash outs in some states, although, the pricing is fugly at 80LTV cash out.  Lol.

Cheers!

@Mordechai Reiss

Assuming you are not a first time investor nor first time home buyer, this prices out between 6.875% to 7.00% on a 5yr PPP at 75LTV.  

What are you seeing that is "high"?

Are you working with a mortgage broker?

Cheers!