Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime

Let's keep in touch

Subscribe to our newsletter for timely insights and actionable tips on your real estate journey.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions
×
Try Pro Features for Free
Start your 7 day free trial. Pick markets, find deals, analyze and manage properties.
Followed Discussions Followed Categories Followed People Followed Locations
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Stephanie P.

Stephanie P. has started 186 posts and replied 4622 times.

Post: Points on an investment loan??

Stephanie P.
#5 Mortgage Brokers & Lenders Contributor
Posted
  • Washington, DC Mortgage Lender/Broker
  • Posts 4,876
  • Votes 2,759
Originally posted by @Armani Diaz:

So I’m acquiring a duplex and my lender gave me a 4.125% and is trying to charge me 1.582% in points. I also own other properties so they are saying this is normal once you are reaching loan capacity. Is this normal to pay points on an investment loan even though I have 750+ credit score and good income? Any insight would be wonderful

It depends on what type of loan you're getting as to how much you're going to pay. Investor loans through Fannie Mae had skyrocketed since May when they decided to cap lender's investment percentage of loans produced. 4.1125% and 1.5 or so in points is not out of the realm of possibility. A DSCR loan would be more in points, but wouldn't have the hassle you're going to have going through underwriting.

Post: Lender asking borrowers to commit to leases.

Stephanie P.
#5 Mortgage Brokers & Lenders Contributor
Posted
  • Washington, DC Mortgage Lender/Broker
  • Posts 4,876
  • Votes 2,759

"You might reread my original post so you can comprehend."
"So if I’m already have a short term rental business in place generating more cash flow than committing to a lease, what would you do? Make a bogus lease to satisfied their rules? No need for that, I rather to be transparent. Do you think that leases have been stable for the last two years? He who has the knowledge, make the rules."
"Great point, the only thing you’re missing is that those rent collection rates you are seeing are measuring the country as a whole, no by state or city. They’re irrelevant."
All quotes. All combative or dismissive. Rude in general. Overall though, I will say you're right. Now is not the time to convert a profitable business from short term financing to long term financing, but you're not going to get a VA loan to do it unless you qualify on your salary and not rents.

BTW, I'm not offended nor am I soft.  I don't have a dog in this fight either way so I really don't care if you waste your time applying for loans to be told no or to be asked by some sketchy loan officer to provide a bogus lease or even if you spend money on an appraisal only to have the underwriter kill the loan down the road because the debt ratio doesn't work because they won't take short term leases.  I just think when you ask for opinions and you get solid opinions from multiple professionals, rebuking them for that concurring opinion (that happens to be different from your uninformed position) is nonsensical.  You wanted opinions. You got opinions.  Do what you want.  All the best.

Stephanie


Post: Lender asking borrowers to commit to leases.

Stephanie P.
#5 Mortgage Brokers & Lenders Contributor
Posted
  • Washington, DC Mortgage Lender/Broker
  • Posts 4,876
  • Votes 2,759

@Carmelo Caceres

Wow.  You're pretty combative in your posts.  No need to be so hostile when you're asking for advice or clarification.  You had your "rant" and should probably take a moment to listen to the information filled answers rather than dismissing the individual.  There's that whole thing most of us heard from our Mom's about God giving us two ears and one mouth for a reason.  @Russell Brazil read and comprehended your post and responded appropriately with good information and @Raymond J. Rodrigues  made great points.  Neither deserve your snark and no, he who has the knowledge (very limited apparently when it comes to lending) doesn't make the rules because he doesn't have any money.  Having said that...

VA, FHA, Fannie Mae, Freddie Mac don't recognize short term rentals because, as others have said, they're active commercial businesses. Drilling down on it, they don't produce income if you don't work them. The theory is that rental properties produce passive income and are not a commercial venture requiring commercial/portfolio type loans.

I'm going to answer your question with a tutorial.

Every loan has a purpose; whether the purpose is to satisfy the requirements of the first time homebuyer, a veteran, a Jumbo borrower, a regular conventional borrower, commercial borrower, a borrower that needs a portfolio loan or a non-qm type loan not to mention DSCR loans. They all satisfy a need. Some require add on's like mortgage insurance, FHA insurance or even the VA funding fee or lack thereof for service disabled veterans or points, but all of those nuances/purposes bring with them very specific guidelines. To emphasize the point, they all have their place and their own guidelines. As lenders, out job is to originate loans that can be sold. It's our number one rule; originate loans so you can get rid of them and make a profit. Period. If we originate loans that we can't get rid of, we'll be out of business when we run out of money which is pretty fast for most brokers/lenders. We have to follow guidelines so we can get rid of the loans we originate and then go get another.

You're not wrong that short term rentals are very profitable for many people that really work them and I think you made a great business decision to manage them last year. While many many small landlords are losing their own homes as tenants are living high on the hog not paying rent, your business is expanding. That solid business acumen doesn't mean that VA or FHA or Fannie Mae or Freddie Mac should recognize you as an authority on their guidelines and change. It doesn't work that way. To answer your original question "We submitted applications to three different banks, two are on the approval process and one turned us down because they wanted us to commit to rental leases in order to get a pre-approval in which we completely disagreed and said no. We have been doing short term rentals and doubling the monthly income compared with what we would be making monthly with a long term lease and everything is documented. With a moratorium in place for over a year and some tenants living for free putting landlords in danger for a foreclosure, how can a lender would possibly ask for such a nonsense?"  They shouldn't be asking you for a bogus lease.  If they are, they're asking for fraud.  They should be simply turning your loan down when you can't produce the long term leases that they require because your loan doesn't meet their criteria or the criteria of their wholesale lender.  No less.  No more.

Post: Hard money loan but I don't own my primary residence... Issue?

Stephanie P.
#5 Mortgage Brokers & Lenders Contributor
Posted
  • Washington, DC Mortgage Lender/Broker
  • Posts 4,876
  • Votes 2,759

@Gary Ryan Herndon

This isn't a weird requirement at all.  MOST long term hold lenders have a requirement that the borrower not be a first time homebuyer.  The main reasons are:

  • Occupancy fraud.  Most people buy their primary residence before they start investing.  Buying without tax returns or paystubs is way easier than going through the sausage grinder of conventional lending and people that don't qualify, sometimes, consider going this route.  
  • Because there is no income verification requirement for many of these loans, there is no real ability to repay other than rent.  If you're living in the property, rent is decreased or non-existent, affecting the property's ability to generate income.
  • RESPA rules are real and have a purpose.  In many respects, they are there to protect the consumer and keep them from being homeless in the event of default.  Skirting the RESPA rules is a felony and if a lender is found to be committing occupancy fraud, they could lose their business and the borrower could be fined or imprisoned or both

Not saying you're committing fraud.  Just saying those are the reasons you may be having a hard time finding a lender that will believe you. They're out there.  Find a good mortgage broker that knows where to send your loan.

All the best

Stephanie

    Post: Private Money, Rates as low as 3.99%, Velocity Mortgage Capital

    Stephanie P.
    #5 Mortgage Brokers & Lenders Contributor
    Posted
    • Washington, DC Mortgage Lender/Broker
    • Posts 4,876
    • Votes 2,759

    @Danielle Rice

    Which of your loan products go down to 3.99?

    Stephanie

    Post: Refinancing Va loan with commercial loan

    Stephanie P.
    #5 Mortgage Brokers & Lenders Contributor
    Posted
    • Washington, DC Mortgage Lender/Broker
    • Posts 4,876
    • Votes 2,759
    Originally posted by @Caleb Edwards:

    Hi. Im looking to refinance a Va loan into a commercial loan and to quit claim the deed to my llc. Will this allow me to restore my full Va entitlement so that I can purchase another property with it? Also I know about the one time restoration but I'm trying to not use thaf

    If the property is now non-owner occupied, yes. The refinance would restore your VA eligibility.

    Post: Has nest egg but unemployed: still possible to finance property?

    Stephanie P.
    #5 Mortgage Brokers & Lenders Contributor
    Posted
    • Washington, DC Mortgage Lender/Broker
    • Posts 4,876
    • Votes 2,759
    Originally posted by @Gio T.:

    Hi everyone! I'm a noob here. Let's say someone has a solid nest egg ($500K) of assets but is currently unemployed, is it still possible to get a loan for say, a multifamily property? If it is, what are the options? Thanks!

    Hey Gio

    Research "DSCR loan".

    That's the type of loan you're looking for.  There are plenty of brokers here on BP that can help you.  Rates are in the 4's on a 30 year fixed for 1-4 unit properties.

    They're a little more expensive than conventional financing, but if you don't qualify for conventional (and you don't), this is the next best thing.

    Stephanie

    Post: Unicorn property in Lakewood Colorado

    Stephanie P.
    #5 Mortgage Brokers & Lenders Contributor
    Posted
    • Washington, DC Mortgage Lender/Broker
    • Posts 4,876
    • Votes 2,759

    @Nina Telthorst

    That's very true.

    Properties have to be comp'd against "like" properties that are similar in style, size and utility AND that have closed in the last 6 months or so to have an accurate picture of value.  If there's an extra house on the property, it will be hard to find something similar and it makes for a very difficult and expensive appraisal that may or may not work for a lender.

    Post: Appraisal fee Houston area

    Stephanie P.
    #5 Mortgage Brokers & Lenders Contributor
    Posted
    • Washington, DC Mortgage Lender/Broker
    • Posts 4,876
    • Votes 2,759

    Investment property appraisals are getting that expensive.  I just received two appraisal quotes in Colorado for residential, single family properties $1100 each.  First quote from a different company was $2500.  Yes, they are large properties and comps will be tough, but  appraisal prices have gone through the roof.

    Investor properties need a 1004 form (standard appraisal form) and a 1007 and a 216 for comp rent schedule and operating income statement if it's a single family and a form 1025 if it's a multi family so they are more work, but...

    What's happening is the appraisal management companies have just added a layer of cost onto the regular cost of doing business.

    Post: Refinancing Hard Money to Commercial

    Stephanie P.
    #5 Mortgage Brokers & Lenders Contributor
    Posted
    • Washington, DC Mortgage Lender/Broker
    • Posts 4,876
    • Votes 2,759

    Those rates are normal and add in a couple of points and some fees like underwriting/processing and of course appraisal and credit report, not to mention taxes, insurance, title insurance, settlement etc...

    They can't offer you a hard number because they don't know what your credit score will be 6 months from now, they don't know what the property's DSCR will be until you rent it, they don't know exactly what the appraised value will be and may have to adjust the ltv, and they can't predict what the economy is going to do 6 months from now so a ballpark figure of where rates are right now is about all they can do.

    Here's an example of how things can change throughout a loan.

    Recent borrower does an application and asks for a quote.  I tell him with the information you just provided, your rate will be 4.25%.  He agrees, we send disclosures and pull credit and his score is 20 points lower than what he told me.  That puts him into a different pricing tier.  Rate's now 4.5%.  We go through the process and the appraisal comes in low. I have to adjust the loan to value and instead of 4.5% at 75% loan to value, the new rate is 4.75% at 80%.  Same points and fees etc..., but the rate changed due to circumstances of the loan so a hard and fast 4.25% or whatever is nice if it happens, but be prepared for a little change.

    Hope that helps

    Stephanie