All Forum Posts by: Kevin Romines

The problem with small loan amounts, I.E. $100,000 or less is that most of those loans are residential in nature and therefore must comply with RESPA. RESPA has a points and fees test for both owner occupied and non-owner occupied. For Owner Occupied, the test is a max. of 3% of the loan amount for items such as the origination, discount points and processing fees. 

On a non-owner occupied, the test is 5% of the loan amount for items such as the origination, discount points and processing fees.

For this reason is why most lenders have minimum loan amounts of $100,000 to $150,000. A credit union is regulated differently than other entities, not that they don't have to comply with RESPA, they do, however they have options at that low loan amount that most the rest of the lending world doesn't have. 

I hope this helps. 

As mentioned above, 1-4 units is considered residential lending, however it can still be done on a commercial loan. 5 + units is a commercial loan or a DSCR loan up to 10 units. The bottom line still is, where do you get the best terms for the loan type that you are looking for or will fit your needs?

LTV's and cash out limitations can factor in to your choices even if it is a residential loan, but can be done on a commercial loan basis. Typically your best rates and terms will be on residential loans, but not always. Cash out on a residential loan will limit you to 70% LTV whereas a Non-QM loan can go to 80% LTV.

So it depends on what your goals are and the loan type that will best fit your needs. These answers may come in to play when deciding on 4 units or 5+ units. 

I hope this helps. 

Conventional loans will limit cash out to 75% LTV on single family and 70% on 2-4 units. You can do cash out on Bank Statement and DSCR up to 80% LTV. You will find most small banks can at least do conventional loans at the LTV stated above.

Most small banks may not do Non-QM loans, however, they may have a portfolio loan that comes close. Their rates will be comparable to what a Broker can offer, but wont necessarily be better. I would at least get pricing from a large Broker company, as they may have more products and equal or better pricing than a small local bank. 

I hope this helps. 

Variable income can be used on Conventional, Non-QM Bank Statement loans and DSCR as well. Do you have variable income for the last 2 years or more, or at least the last year? If so, you can go Conventional if the debt ratio works out. You can always go Bank Statement if you are self employed.

DSCR is for rental properties, so it depends on the property type as to which of these loans will fit you the best?

I hope this helps. 

We have over 200 national institutional and private lenders that can lend hard money, fix n flip, and buy and hold lending options. Ask any questions, I'm happy to help. 

Most of my private investors have an entity or a trust. Some loan in their personal name. I would advise you to find an attorney that has experience with private lenders. It may be tough to find, just ask other investors that lend private money, who they use?

@Gao Nou X. Yes, underwriting guidelines change as things in the industry affect past and current guidelines. Since the rates started getting cranked up about 2 years ago, the guidelines have changed and tightened up quite a bit. Its always worth shopping around for a different alternative. 

I believe the HELOC's that we use for investment p[roperties are still going to about 70% CLTV.

I hope this helps. 

Fannie Mae and Freddie Mac are 75% LTV max. However, there are Non-QM loans that are either full doc or bank statement loans that will allow up to 80% cash out.

I hope that helps?

The pre-payment penalty is very specific to your game plans. Is it possible that rates come down soon, yes, but know one can actually predict the future accurately. Generally, you will need the rate on the new refinance to be 1% lower than your current rate or lower. At that point, it should not take any more than 2.5-5 years to recoup your refinance closing costs with the new lower rate and payment. Longer than 5 years and the loan is to costly. Look at the difference of the rate versus the lesser pre-payment penalty time frame to decide the cost difference to the rate or costs. I hope this helps? 

You can go up to 85% LTV with some lenders. Your credit score just sets the rates available to you based on that LTV. You can choose between 0-5 years for a pre-payment penalty, which also affects rates. The 1 year 1099 won't come into the picture as no income or employment is put on the application. Hit me up with any other questions you may have.