All Forum Posts by: Reid Chauvin

Productive debates are what make this board great, @Kristin Fleming! 

Not trying to throw shade on DSCR loans, @Kristin Fleming. We offer Non-QM loans as well and they can be VERY useful. I just feel strongly that their main benefit is as an alternative to conventional financing when the borrower cannot otherwise qualify for whatever it is they are trying to do. The 40 year term with 10 years interest only is one great thing that conventional loans don't offer that DSCR do, and the cash-out refi seasoning period for DSCR is HUGE with the recent change in conventional guidelines. For most borrowers though who are just trying to buy an investment property and CAN qualify for conventional financing, it does not make sense to use a DSCR loan. The upfront costs and the interest rates are higher than conventional loans, often by a pretty material amount. I like to show the 2 loan options side by side to let the borrower decide. 95% of the time they have opted for the conventional loan, since they can also flip title to the property into an LLC after closing on it in their name.

@Jasmine Vida - what are you hoping for with these other loans? DSCR and Bank Statement loans are additional options to help investors qualify for financing - there's generally no tangible benefit to using these 'non QM' loans over conventional loans if you are eligible for conv loans. They don't have any lower down payment benefits or lower interest rates or anything. Hard Money loans are short term loans geared towards fix & flip, and some investors will use these loans to renovate buy & hold properties. They also carry a higher interest rate than conventional loans and you want to have an exit strategy so you are not stuck with this loan longer than you need to be.

@Damilola Olowu - chances are you will not be able to take cash out of the property via refinance for at least 6 months after acquisition (that timeframe is about to become 12 months for conventional loans). If you don't need to get cash-out and just want to pay off your hard money loan and put a more favorable loan in place, you can do a rate/term refi immediately. Only other realistic option that I can think of to get your money out ASAP is to sell the property. 

@Cheng Chu - most of my clients have employed the second strategy of buying in their names and then flipping into an LLC after closing. You and your partners would be co-borrowers on the same loan. The title company you close with should be able to assist with process of transferring the deed into the LLC afterwards.

Hi @J Pozza - I'm in Nashville and would be happy to take a look at this for you. Feel free to reach out! 

@Ryan C. - For conventional loans, the only reason they would use 75% of rental income is if that property was not yet on your tax returns. Otherwise, they are required to complete Fannie Mae's 1038a worksheet (you can google Fannie Mae rental income worksheet and download a copy if you want to run the #'s yourself).

Aside from starting a new job an alternative might be finding a co-signer. Short of that, perhaps you can find a small bank local to the area you are moving who will lend to you based on your assets. Maybe if you do another post with the location someone will be able to chime in. Good luck! 

@Ryan C. - I'm not sure you are going to find someone who does not consider DTI in qualifying a borrower for a non-income producing primary residence. It doesn't really make sense if you think about it. The specialization is in accurately calculating DTI to use all possible income and minimize debts, and in tailoring the loan to reach a tolerable DTI. Perhaps you can put more money down? Perhaps you can waive escrows? There are a few things you can do to try and make it work.

@Ryan C. - Lenders should be using your schedule E for rental income for any properties that you've had since you last filed taxes. They should only use the 75% factor for newer properties. Not sure if that helps your case. 

@Kevin Forsell  - As others have said, what you are contemplating is blatant mortgage fraud. The FBI does investigate this. Some people will say/do anything to make a deal work, especially when times are tougher, and unfortunately not every realtor/lender/property manager is looking out for your best interest...The good news is that there ARE ethical business partners out there who would be happy to assist you. It may be worthwhile to identify another agent to partner with for this purchase. Good luck and keep leveraging this community as a sounding board!