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All Forum Posts by: Stephanie P.

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

Post: Two Unit Commercial Loan

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

Chris 

the problem here is that the property is not in a LLC. It is in my personal name. This deal has been a nightmare trying to figure out how this loan is structured.

I know there is at least 240K now from my rehabbing and new tenants.  This place is a cash flowing. 


Different terms for the same thing. A non-owner occupied rental property, in some circles, is considered a commercial property. It sounds like you have a DSCR loan or "business purpose" loan on the duplex right now. If that's the case, you may have a prepayment penalty, so be careful. If the property is worth $240,000, then the max ltv will be 75% of that or $180,000. If you purchased it for $130,000 in 2019 and you used a DSCR loan, you probably put 25% down, so your payoff is about $100,000. To answer your question, after costs, you will probably have about $65,000 to play with when all is said and done and it will still have decent cash flow. Again, watch for a prepayment penalty and do another DSCR loan.

Post: Need help with refinance

Stephanie P.
#5 Mortgage Brokers & Lenders Contributor
Posted
  • Washington, DC Mortgage Lender/Broker
  • Posts 4,876
  • Votes 2,759
Quote from @Nathan Caffero:
Quote from @David Kelly:

Hi Nathan, 

Do you have available cash to fix your credit by paying down Liabilities?  If so, you may be able to fix it quick and do a rapid rescore.  That is one thing I have done for others.  Its a complimentary program we can use and usually is pretty accurate.  Once the debt is paid all I would need from you is a statement or transaction history to show the new balance.  I would then have my credit agency update the report with the new scores.  

Adding a borrower may not help.  Normally the lower of the two scores are used for eligibility.  There is a new guideline that may be coming out (or already is out) that will allow the average of two scores for the qualifying score.  So a 550 and a 780 would be a 665.


I have some available cash. I paid off a bunch of things and even got something from collections removed, but my score has stayed the same 


 Keep your cash.

You have to find out what's making your score so low.  You have to do a 'What if" scenario or "Wayfinder".  Either one will give you the road map to not only fixing what's keeping your score low, but keep you from spending money on things that aren't impacting your score.  What if and Wayfinder are on your credit report and can be accessed either through Experian, Transunion or Equifax separately.  My company, a mortgage company, gets the borrowers to pay for a credit report up front so we know if we can get them a loan.  If the score is low and the credit report shows the potential score, we get them together with the credit reporting company we order credit through to figure out what course of action they need to take to get their scores up.  They get the potential new scores and the cost to get there; everything is up front. 

To update each bureau separately and each trade line separately costs a little and take some time (a few days to get the report with the new scores), but saves you a ton in interest rate and subsequently monthly payment down the road.  Pm me for more details.

Stephanie

Post: Clarity on DSCR Loans

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

Fairly new to the real estate scene and am interested in purchasing a multi-family, preferably a quadplex, by the end of the year. 

I have been exploring DSCR loans as a mechanism of financing. The yielded BP forum posts and online searches have been helpful, though there are a few things I find ambiguous.. If you may kindly clarify for a newbie.

In particular, is previous property ownership required to pursue this option (It seems a ratio of ~1.2 is more important); Also, wondering if the property in question must be purchased through a LLC? Some lender websites comment on the aforementioned while others do not. Therefore, wondering if there is a specific set of criteria with respect to this or if this differs from lender to lender.

Thank you for your time (and patience). :D


LLC is not required by all lenders, but it is by some. Using a good mortgage broker that understands the different lender requirements is key.

Post: Non QM, non recourse, non conventional…?

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

@Gary Moore

Were you able to find anyone for your purchase?  

Max ltv on these would be 80% on a DSCR.

PM for more details

Stephanie

Post: What is your desired DSCR

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

Is there a DSCR you guys try to shoot for? What DSCR range do you try to stay within? I know banks prefer to stay between 1.1-1.2.

I see all the deals coming to me at a very low DSCR.

I've been investing all my life for cash flow but it seems that most of the deals no longer cash flow.

Thanks,

Luis

1.0 or better works. The lowest I've seen is .85, but the LTV is reduced.

Post: Do I need a Mortage Broker ?

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

Hi everyone! This question is in regards to getting pre-qualified for a loan to buy my first investment. As a real estate investor, do I need a mortgage broker? And if so, what are the pros and cons?


 Full disclosure, I'm a mortgage broker.

The real answer is that it depends on your situation. If you're buying your first home and you're looking for a multi family to begin to scale doors, then bank financing is just fine and they may have access to first time home buyer products that aren't readily available to a lot of lenders. If you're looking for your 2nd or 3rd or 10th investment property, then a mortgage broker can be invaluable; particularly one that understands conventional guidelines. Conventional money is still the cheapest out there when it comes to investment properties, but many people don't qualify because their DTI is too high. That's when a mortgage broker really earns his/her money because they can tailor a DSCR product to your specific requirements. They have access to a wide variety of lenders that can make the loan fit for you.

So, not a straightforward answer, but not much is these days.  It all depends on you and where you are.

Stephanie

Post: Im having financing issues and a great off market deal

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

@Dominic Lupe

Your home is newly renovated.  Stay there.

Get the sellers to add you to title and then refinance them off any liens they may have on it in 6 months. It's May. They want to be done with the property by November. You have time. By then, you'll have 2 years self employed and be able to qualify for conventional financing or do a DSCR loan; but either way, you'll be in title and qualify.

Post: Searching for No Income Loan

Stephanie P.
#5 Mortgage Brokers & Lenders Contributor
Posted
  • Washington, DC Mortgage Lender/Broker
  • Posts 4,876
  • Votes 2,759
Quote from @Melanie Nunes:
Quote from @Alex Bekeza:

@Melanie Nunes Pro tip.  Most commercial lenders will not do a loan on a property below $100,000 value. I bought a property in January that was listed for $98,000. (I knew it was under market because I had others on the same street which had appraised much higher). So I offered $100,000 with a 2% seller concession (just so I could hit that $75k loan minimum) and got a great 30 year fixed commercial loan with no DTI requirements.


 Hi Alex! 

That is a great suggestion. I spoke with a lender earlier this week that brought this up to me as well. That could definitely work. The other two issues I have run into are: town population is too small, and not lending on mixed use properties. 

Do you believe those two items would be an issue for your underwriting team? 

Thank you! 

@Melanie Nunes

The deck is stacked against this one.

Rural, mixed use, right at 75K for commercial (but not just commercial; mixed use) for an absentee landlord will have no job that lives 3000 miles away. Not sure that loan is out there.  Try a local Maine bank, local credit union or seller financing like @Alex Bekeza is suggesting.  

Post: Understanding loan origination fees

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

@Alex Hunt

It's not right for you to say this lady got "bait and switched". You don't know her particular situation. Her score could have dropped and her ltv could have gone up. Just yesterday, I quoted a rate on a 4 unit in Alabama for a borrower who has about a 780 score. The rate, at 80% ltv was 7.5 with one lender and 6.875 at 70%. Same borrower, same score, same ltv, similar property closed in January for 4.25%. These are DSCR loans. The OP is talking about a bank statement loan and they've gone through the roof as well.

On bank statement loans, most brokers have their lender paid comp set at 2 points or more, so that wouldn't be considered high, even if it's borrower paid comp. 2K in miscellaneous fees isn't out of the norm either. Lenders charge from $999 to $1995 for underwriting fees and then another $595 for an LLC review and maybe $600 in closing fees. There can be miscellaneous other doc fees as well. My point is there are lots of different scenarios that could drive her rate higher.

Post: Will hard money interest rates change?

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

@Meredith Von Kleydorff

Are folks still able to get away with charge +12%?  Sounds nuts considering the rampant fee and rate compression in the market today.  Perhaps that higher rate market exists for first time/inexperienced borrowers.

Anyway, for now, it is my opinion that hard money rates, at least short-term rates, will stay put in the face of rising government rates. There is so much capital in the market today, stiff competition for experienced borrowers and starvation for a non-volatile, non-correlated yield.  Hard money used to be a super local, more mom and pop shop type of industry, however, with advances and technology and institutional capital seeking to partake in this space, the industry has changed.  Think Civic...now owned by a bank...when it comes purely to rate, their cost of capital is super low and thus no one can compete. 

Until government rates push into the 7-8% range, I suspect your short-term 8-12% rates for fix/flip and similar type programs will stay put. On other hand, those long-term, DSCR loans have already increased or you are seeing those previously fixed rates now change to adjustable rates to protect against interest rate risk.

Will be great to see what others think on this subject!

 @Patrick Prunty

I'm not seeing anyone go to ARM's (other than Civic on their no seasoning product). Companies like Finance of America, Deephaven and HomeXpress don't even offer ARMs that I'm aware of. The big change in the DSCR world has been to push interest only for the first 10 years and then go to a 30 year fixed afterward, significantly raising the yield for the lender and increasing the investor's cashflow. I do agree, however, that short term rates will hold.