All Forum Posts by: Stephanie P.

 Hey Danielle

Welcome to BP!!

It's a lender specific condition. Some want 6 month's reserves for each property you own, others just want it for the subject property and still others don't care about reserves at all.  Just depends on the lender.

Hope that helps.

Stephanie

 Hey Jared

A conventional loan would work for you if you qualify. It would free up the FHA to use again in the future and remove MI. A commercial loan won't work because I'm assuming the home is still owner occupied.

Stephanie

What type of loan @Paulette L.?  Owner occupied?  Investor?  Second Home?  Vacation Home?  Short term or long term rental?  Lots of lenders do different things.

As others have said, DSCR is a good way to go. Rates are very solid at 80% and below. No income verification. The rents are used to offset the mortgage. You can close in an LLC or personal. 6 months reserves are the usual requirement although there are some products that don't require reserves. Expect a prepayment penalty, but if you want to keep the property, use it to your advantage. The longer prepays affect the rate in a positive way.

No worries. You are on the path to the solution but if you want a loan on the property, you'll have to get the SFR split before the purchase. You'll have to get the seller to separate the church from the deed and then get a survey showing only the SFR. Then get the parcel either rezoned to put it into a residential status where a single family residential property is allowed or leave the zoning alone and get the property designated "legal non-conforming" with a 100% rebuild letter from the taxing authority like the county or city. Have a side deal for the seller to sell you the church for a dollar or something like that, completely separate from this transaction or make that side deal contingent on closing on the SFR.

You're right.  It's too small for any commercial lender (unless they're very local to the property like a local bank or credit union).

This is not a conventional loan.  Crazy that they even took it.

The church is the problem. No appraisers are taking the job from the Appraisal Management Company (AMC) because there are no comps and because they don't know how to appraise a mixed use property. It's a commercial loan at best.

If you want to go conventional, the church has to go. See if it can be removed from the transaction and if the SFR will appraise without it. Are they on the same parcel?

An open ended extension isn't the problem and neither is a bridge loan. Sounds like your have Realtors and lenders that don't know what they're doing.  Restructure the deal without the church and you should be fine.

Stephanie

@Alex Brown

The thread could have stopped at @Ian Walsh's comment.

Stephanie

@Moazzem Hussain

10% down doesn't exist for that loan.

You're looking at 20% minimum with very few lenders that will go 80% ltv on short term rentals.

These types of loans are the best choice for borrowers that can't qualify for conventional financing.  Note that conventional financing is still the preferred loan product because of the rate and fee structure.  Unfortunately, many don't qualify for conventional financing for one reason or another.

Some facts about 

They close in about 30 days if you get the documentation in in a timely manner.

They require full appraisals (which is usually what takes the longest).

Typically you need to have 6 months of reserves, but if you're doing a cash out refinance, the cash can be used for reserves.

Credit scores go down to 620 middle

They require prepayment penalties

Rates and fees are higher than conventional

No income verification like tax returns, pay stubs or profit and loss statements are required.

Usually, it costs at least 2 points and about 2K in lender/broker fees. I don't know anyone that's charging .5%. Unlike conventional where the broker's fees are "lender paid" most DSCR brokers charge the borrowers at close.

Never pay an "application fee" or any other fee up front other than for third party services like appraisal or credit report.

Hope that helps

Stephanie

 How is a bogus lease legal?  Some lenders are requiring proof of receipt of the payments.

@Jesse Goldstein There are lenders out there that will do STR. You just need to use one of those and go with the current market rate. We were in the 4's in February. Unfortunately, as many have written in this thread and others, that's history. Rates on those are in the 6's and 7's now and going higher as the Fed continues to move north. Hopefully the numbers will work at the higher rate.