All Forum Posts by: Stephanie P.

In my experience, the thing that differentiates a good lender vs bad is communication.  If you can't get someone on the phone or if they don't ask you questions to find out what's most important to you and your deal, then find someone that does and will.  You need a broker that understands your requirements and your goals so they can send you to the proper lender.  We ask a ton of questions up front so we know where to send your loan.

For example

Borrower is trying to buy a property, but can't season the funds to close. There are ten lenders out there that will do a DSCR loan, some to 85% loan to value, but there's only one that will do it without seasoning on title. If the borrower isn't interviewed up front, and asked some very important questions, that loan could end up going to one of the nine that need seasoned funds, wasting valuable time (and money for an appraisal) before it gets denied and then sent to the right lender. In this instance, the rate doesn't matter because there's only one lender that will do the loan.

Communications is key.

If you can go with conventional financing meaning you can qualify using a fully documented loan, that's the best way to go because it's least expensive. The next option would be a DSCR loan. It's based on the borrower's credit and the property's income and that's it. They're more expensive, but much easier to qualify. Go conventional if you can and if not, go DSCR.

Stephanie

 Saman

If the house is set up to support two families, you may have changed the footprint of the house to create internal obsolescence. If it's not a legal 2 unit meaning the zoning doesn't allow for two units, but you've changed the property to support two families, no lender will do the loan.  Add rural to the equation and you're going to have a tough time on this one.

Stephanie

Banks, credit unions and correspondent lenders sometimes have "overlays" meaning if Fannie/Freddie will allow you 10 financed properties plus your primary, they may think that's too much risk for them, so they have internal guidelines that reduce the number of properties financed.  For a long time, many lenders did the same thing with cash out.  The guideline from Fannie/Freddie is 6 months, but numerous lenders would make borrowers wait 12 months before they could use a new appraisal amount for cash out.  Now, only the most conservative out there require 12 months.

Stephanie

The Fannie/Freddie rule is 10+ the primary like @Nick Belsky said earlier in the thread.

Rates, fees, loan products and guidelines are not the same lender to lender. That's why you need a mortgage broker to get on the phone with you, find out the nuances of the deal and they'll let you know the best lender for your loan.

I looked at a loan yesterday; a refinance in Ohio with some hair on it.  The rates were all over the board.  This list is from 4 different lenders.  I didn't even bother with 3 others that I regularly send loans to because, after speaking to the borrower, the loan wouldn't get through their underwriting.  The borrower's goal was cash out without a lot of emphasis put on cash flow.

1. 1.  Loan amount of $132,000. 8.25% interest. 3.25 points. Initial payment $992
2. 2.  Loan amount of $150,000. 7.875% interest rate. 4.25 points. Initial payment $1092
3. 3.  Loan amount of $140,000. 9.99 interest rate. 2 points Initial payment $1,228
4. 4. This one only debt-services at 65% LTV for our 5/1 ARM and we can accommodate this at 8.25% + 4 pts or we can accommodate 75% LTV at 10.5% + 4 pts or 10.99% + 3.5 pts for our 1 or 2 year bridge loans."
   

The deal is marinating right now, but he'll probably go with option 2 for the cash out.  He's not too worried about the points because for $1500, he gets an extra $18,000 in cash.

Hope that answers your question

Stephanie

 3 months would be the minimum for a decent loan product.

I would say having a broker that does conventional financing and one that does DSCR loans would be prudent. Like @Robin Simon alluded to and I totally agree, you have to have someone you trust doing your loans.

A Sole Member LLC is a pass through entity so it goes on the Schedule E instead of a K1 and that makes the income yours instead of a corporation's.

It's not that specific underwriter.  It's the proper way to look at the income considering the way the IRS looks at LLCs vs C Corps.  

Sorry

Stephanie

 Brilliant