All Forum Posts by: Stephanie P.
Stephanie P. has started 186 posts and replied 4622 times.
Post: Refinance. Or, Stay the Course
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Originally posted by @Sean Stroh:
@Stephanie P. Absolutely. I appreciate the response. Do you happen to have a book or youtube video that you've used to learn how make equity work for you?
Go to the search bar and click on "Bookstore". Plenty of choices up there.
I couldn't recommend just one.
Post: Refinance. Or, Stay the Course
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
You're the only person who can really answer that question, but it seems that your goals align with long term growth rather than paying off your properties quickly. With that in mind, make your property work for you by tapping the equity and letting it help you buy the next property and cash flow with a longer term.
Post: Lender for BRRRR Refinancing before 6 months?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Originally posted by @Tarik Turner:
Originally posted by @Jesse Kerr:
Originally posted by @Tarik Turner:
You can refi based on the appraised value after 30 days but it won't be with a conventional loan product. There are commercial products available, however with commercial based products expect a higher rate
Do you have any suggestions as to what banks provide commercial lending to enable refi before the 6 month period, pulling cash out? Percentage doesn't matter.
We use to offer this product but have suspended it since the beginning of the pandemic. Contact @Stephanie P. she may be able to help you on this one.
Thanks @Tarik Turner
Post: Small Multifamily Portfolio Loans
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
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Originally posted by @Allan C.:
@Andrew Merritt I would not recommend getting a portfolio loan for the small loan side that you have for the following reasons:
- cross collaterizing puts all of your assets at risk
- commercial loans will have higher interest rates and most come with balloon terms, exposing you to variable interest rates
- portfolio loans come with bank rules, and many are cumbersome to maintain (ie reserves, DSCR mins, updates on financials, etc)
- may require more more down payment or higher DSCR
Does refinancing your existing loans with residential terms not meet your goals?
If you can go with conventional financing, in the long run, when it comes to interest rates and closing costs, you will save money. Having said that, having one payment instead of 16 does seem way easier.
To answer some questions about the efficacy of a DSCR loan,
- the interest rates are in the 4's (even on a blanket/portfolio loan and that is historically low)
- there is no scrutiny when it comes to personal income.
- Balloon terms on DSCR loans are really rare. Most are just simple 30 year fixed with prepayment penalties
- as long as you're paying your mortgage monthly, there is no yearly financials dance
- and no requirement to maintain a certain amount of reserves. Some DSCR lenders don't even require reserves to close (although most require 6 months).
Hope that helps.
Stephanie
Post: Debt to income ration at razor thin margin
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Originally posted by @Curt Bixel:
I am attempting to refinance two rental properties. My loan officer has indicated that my debt to income ratio is really close, and it is going to come down to being able to verify each and every rental payment.
I have refinanced quite a few properties over the past few years, and this has never been an issue before, but several things have changed. Here are the two main things that have changed:
- 1) Out of 13 rental units, I have recently converted three of them into short term rentals. Although they are making much more each month, my loan officer has indicated that the underwriters will not count this as income. (This, unfortunately, is about $4500 of income each month that the underwriters will not count.
- 2) I am a teacher, and I took a part time leave this year to dig into real estate a bit. This has gone well, but until next August, my salary is reduced.
I don't have much worry about getting myself in trouble taking on too much debt, as I have plenty of savings to fall back on, I can go back full time in the fall, and if anything should interrupt the short term rental income, I can always convert them back to standard rentals. My credit score is above 800.
I wonder if anyone else has been in this situation, and has some ideas on how to improve things a bit before making the application. Ideas I have had are:
- Put less on my credit card each month? (I do pay it off completely every month without fail, but I could run up a smaller balance each month.
- Raise the rents on the tenants I have that are due for a rent increase, and do this before applying.
- Convert one of the short term rental units back to a standard rental.
I really don't have any other debt of any kind aside from the mortgages on my personal home and my rental properties, so there are really no other loans I can pay off.
Any advice or hints would help. (All legal and above board please. :) )
Hey Curt
As others have said, go with a DSCR broker. You can still get a 30 year fixed and the rates can go into the high 3's if you pay a couple of points.
If the loan originator you have is telling you your DTI is close, just punt. The underwriter is probably going to string you out and then deny the loan because you won't be able to use the STR income and with reduced regular income, Fannie Mae probably isn't a option.
Stephanie
Post: Refinancing out of an FHA to conventional
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Originally posted by @Mario Morales:
I currently have an FHA loan and in April 2022 it will be a year with this property. I would like to refinance into conventional so that I can do the FHA loan again for my next property.
I probably won't have the 20% equity but I would still like to go conventional so that I can move onto my next FHA loan.
What are the pros and cons and any advice you can give.
Limited cash out refinance meaning a rate and term refinance can go to 97% ltv on an owner occupied property. You'll have mortgage insurance, but you can refinance out of the FHA loan. Unfortunately, you'll probably find that you'll have a higher rate than April 2021.
The only reason to use FHA for your next purchase is if you're buying a multi family property. Otherwise stick with conventional and put 5% down. The mortgage insurance is cheaper and goes away over time.
Post: Analyzing Duplex Zoned As Both Commercial and Residential
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Sounds like a "mixed use" property. Watch the zoning on this one and make sure, before any construction is started that turning it into condos is allowable by the zoning authority.
Post: How to purchase 2nd House Hack
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
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Your next property should utilize either an FHA loan (if you're going to live in it and you're more than 100 miles from the first property and you've lived in the other for more than 1 year) or if you're staying in the same general vicinity, then a 5% down conventional loan would work.
Post: Too good to be true financing option ???
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
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Originally posted by @Shehan Omantha:
Right. They have asked for 1% upfront fees and they provided a personal account number in for a bank in a different state.
Run away. It's a scam.
Post: Tricky Lending Situation
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
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Originally posted by @Luke Berry:
I house hacked my Primary Residence for $580,000.00 In January of 2021 ($3,000/month PITI, 548k Principal balance remaining). I originally thought that I could qualify for the loan by myself because my 3 roommates were paying me $675/month/person; however, I was unable to utilize that income for the debt to income calculations at the time. As a result, I had to bring my parents on as cosigners to not pass up a great deal.
Now that my roommates are getting ready to move out, I want to turn it into a STR & buy another primary residence (300-350k range) using 5% down. I quit my comfortable W-2 job in August to get into wholesaling which has already made me more than my old job did in a year, but I am now unable to refi my current residence or get a new mortgage because I'm self employed.
I have about $100k liquid but would prefer to preserve as much as possible given how cheap debt is at the moment. How can I work around this in order to achieve my goals?
- Keep my current residence as a STR (preferably on a low interest rate - currently 3%, 30 yr).
- Get my parents off of the cosign
- Buy another property using 5% down.
I am open to all ideas of how to get out of this tricky situation.
I hate to be the bearer of bad news, but you're over-leveraged and didn't get good counsel before blazing forward.
Four points for growth.
- This real estate journey needs to be looked at like the pyramids where one block builds on the next, not like Jenga.
- When house hacking, financing is critical to growth.
- You've got to have a team of trusted advisors who can tell you when you're about to do something stupid and you've got to be humble enough to listen to their counsel.
Multiple red flags your missed.
- When you were told you couldn't qualify for current property using the current boarder income, you should have taken pause.
- When you encumbered your parent's credit for an overpriced house, you should have paused.
- When you got yourself a highly leveraged $580K property, you quit your job, not for a new job but for a RISKY real estate venture. Yes, risky even though it's paying more, it's self employment and that's always risky in the eyes of an underwriter.
- Before you started your new company, you absolutely should have consulted your mortgage guy who would have told you that you wouldn't qualify for a new conventional loan with under 2 years of self employment.
Having said all that, you should go rent somewhere cheap for 2 years while you get your new financial life together. Leave the financing that you have in place for that period of time (you're not going to find 5% down, 3% money anywhere until your self employment seasons). Make sure you pay your rent with verifiable assets so when the time comes to refinance out, you haven't screwed yourself (and your parents) by paying your rent in cash. Make sure you pay your taxes for the next two years with minimal deductions so your income from self employment is strong and you qualify to refinance.