All Forum Posts by: Stephanie P.
Stephanie P. has started 186 posts and replied 4622 times.
Post: Financing a House With Family Members (in an LLC)
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Seth Sutherland:
I'm planning to buy a rental property with a family member this summer. She has the cash but no credit, and I have the credit but no cash. Of course we want to end with the property in an LLC, but I'm unsure of how to get from A to B. I've read some disheartening blog posts about buying a property as an individual and then transferring it to an LLC, mainly due to clauses viewing the transfer as a sale and requiring a full payment of the mortgage.
I also saw that some mortgage companies won't loan to LLCs (if the LLC buys the house instead of me as an individual), and of course the loan will have a higher interest rate for an LLC.
However, if I buy the house as an individual before moving the property into an LLC, then my family member would have to "gift" me the down payment and we'd be hit with gift taxes. Besides, it would work for me but I realize that most investors would never "gift" a down payment before financing a property as they lose all legal rights to the money.
So my question is, what is the process to mortgage a property with an investor's money? How do we go from somebody with cash (the passive investor) and somebody with credit (who will be running the rental) to two people with 50/50 shares in an LLC investment property?
There's a lot of structuring that needs to take place on this one.
If you've got the credit and she has the cash, ask her to put the cash either into your account or open a joint account (if you're going to do the LLC) right away. Do it now because the funds need to be seasoned for a period of time depending on the lender. If you're doing the LLC, then make her a less than 20% partner so her credit (or lack therof) isn't a factor. She won't have to be a personal guarantor either. Some lenders are skittish about lending to investors that don't either own their own home or have a mortgage history.
The rate will be the same whether it's in an LLC or personal, but there will be an entity review fee of about $600.
A DSCR loan is the way to go on this one, but you need to make sure you get with a broker that's experienced. Lots can go wrong if it's not structured correctly up front.
All the best
Stephanie
Post: Mortgage Lender wont let me refinance equity. Options?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Mark S.:
Quote from @Chris Mason:
Quote from @Lily Sellers:
Got pre-approved for another investment property for only 200k (not much in my market) But, I have more than enough equity in one of my other properties that would cover more than enough for the difference I want to spend on a specific property. I tried seeing my options for refinancing the house to tap into some of the equity but the mortgage lender I'm using told me My DTI ratio is too high (Hasn't been two years reporting tenants renting, and my second job hasn't been secured for two years) So I can't refinance the loan. Other than waiting out the two years to include both of the previously mentioned incomes, is there another way to tap into the equity of my house? Does HELOC's go off of DTI ratio as well? Is there any other options other than refinancing and Helocs? Is DTI different for different mortgage lenders? Thanks in advance friends. Because of everyone's expertise on these forums I have already made life changing investments in the last year.
Landlord/rental income from a traditional long term tenant is actually the ONLY form of self-employment income where Fannie/Freddie do NOT require a 2 year history on tax returns.
Try a different lender. Don't rush to the DSCR subprime option when there's still a really good chance you can get A-paper Fannie financing.
Hey Chris, I'm currently being offered a DSCR loan, over 30, on a property I'm short on buying all in cash right now. The loan won't be for long, it's only for 105K as I'm dropping like 60% down. I'll likely pay off the balance by the end of the year, I just didn't have enough to buy it straight up.
Any drawbacks to these types of loans? Never did them before.
I didn't see a response to your question, so I thought I'd help out. In your case, a DSCR loan may work, but you'd have to factor in a prepayment penalty. There are almost always prepayment penalties and buying them out or down can make the loan too pricey. Usually, there's at least a 3 year prepay and sometimes up to 5. The penalties can be just a straight percentage or declining, depending on the lender.
Hope that answers your question
Stephanie
Post: 15% Down DSCR Loan Specifically for STR
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Post: loan options advice for variable income on second home purchase
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Margharita Silva:
hi, I have a situation where i own a condo which i bought in cash and have a tenant in it who pays on time. I am a renter myself in another state. I want to buy another property - even possibly in the same condo building, have 10-20% down payment saved up, have excellent credit 802 - and payment history, have no carrying dept. However, I have very little and invariable income as a freelancer.
Is there any type of loan i could get? I am planning on moving to the condo i bought while i make the second purchase an investment property and collect the rent to pay for the mortgage. Alternatively, can i use the condo i own and the rent i am currently collecting as a "guarantor" to the loan?
Get a DSCR loan and call it a day. No income verification other than the lease or comparable rent schedule and 20% down on a purchase. You'll personally guaranty the loan.
Stephanie
Post: How to find direct lender for DSCR?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Short term rental is the problem here. The amount of lenders that will allow or qualify you off of STR is limited compared to LTR.
Rates have jumped significantly in the past month or 6 weeks, but seem to be calming down right now. Most lenders raised their floor rates from the high 3's to 5 or so causing all rates in all ltv/FICO buckets to jump.
7.5% still seems high, but see if you can find LTR comparables that will get you to 1.0 DSCR or better. Might be tough at that price point. @Hoi L. I think we looked at that 5 unit for you. Rates were tough, but part of it was because it was a 5 unit. 4 units and below and you're correct, 75% and below is where the rates get good.
Stephanie
Post: Found a 5-plex but need some professional opinion
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Dennis Olguin:
Happy Sunday!
I found a 5-plex deal asking price is $899k. However, the owner wants to do a 1031. There are money lenders who are willing to help with this deal but they would want a 25% down. What my question is has anyone done an owner finance down payment?
If so what are the pros and cons!
Thank you :)
Most lenders will want you to have your own funds for the down payment and closing costs. 25% is about right for a 5 unit.
Post: Lender Recommendations/Creative Financing Suggestions
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Darvin Johnson:
@Stephanie P. Thanks so much for the info! I've mostly been finding lenders that require 20%. I've already got the lending for one side in place. If I am able to get both I'll weight the pro's and cons of having the deeds converted back to a single deed.
Conventional financing should be able to go to 85%. I've provided a link to the Fannie Mae eligibility matrix below.
display (fanniemae.com)
If for some reason you don't qualify, there are other ways to get the 85%. Deephaven has an 85% purchase, investor loan product with just 1 year of income. Rate is higher than conventional, but it closes and if you bought the property right, it will cash flow.
Is the property in Michigan?
I'll PM you a referral for that area
Post: Lender Recommendations/Creative Financing Suggestions
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Darvin Johnson:
@Stephanie P. It is a duplex, two attached townhouse style units. They were deeded separately so that they could be sold individually.
You should be able to get a 5% down conventional loan for one and 15% for the other since it's a non-owner. Let me know if you need a referral for someone to do that for you. I can't because I only do DSCR loans, but I have friends that do.
All the best
Stephanie
Post: Lender Recommendations/Creative Financing Suggestions
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
You're describing two different properties rather than a duplex. Are they on the same parcel?
Post: Non QM DSCR loan rates
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Cham Oug:
I hope someone can help me with this question! I am closing on a duplex in Wisconsin and the mortgage broker that I am working with, told me that the rate for a 30 year non QM would be at 7.125% does that seem high or should I shop around to find a better rate.
thank you for your answers
It really depends on the situation. Rates in the DSCR world can get that high, but usually that's for a mixed use or 5+ unit building or a low credit score. We're still seeing rates in the 5's on 30 year fixed.