All Forum Posts by: Zach Wain

Yes it is possible.  But, Cash out rates are going up very soon due to some new rules that the Federal Housing Finance Agency put in place.  Even if rates drop, cash out price hits are going up so I would recommend moving on it sooner rather than later

Reserves! Go with less down, maybe a conv 3% down purchase if its a SFR.

 By August 2023, CPI will be at 2%!  Mark it down, I can explain in more detail.  Look into the future, when the last 6 months of crazy high CPI months fall off, we will look great.  And, "shelter" costs are the highest they have been in all of 2022 on the last CPI report!! WHY?  Because the way the US Bureau of labor statistic calculates shelter costs is a 9-15 month lagging indicator.  PCE, is a little tougher to predict

A cash out conventional loan will likely be your overall best deal. Depending on your income level, you should likely buy with a conventional loan on the other properties as well. DSCR is only there if you can not get a conventional loan. Good luck!

I agree rates keep slipping, but those new LLPA's are not going to help the majority of borrowers.  FHFA keeps changing the rules to the game...

@Keaton Bramlett - The devil is in the details when it comes to DSCR loans. There are multiple loan products with different ratio requirements, different downpayment requirements, high fees and long pre payment penalties are something to go over in detail as well!

We have a massive bucket of DSCR loan programs and options, feel free to reach out if you have any questions.

99.99% chance no, you can not.  They approved the loan with 2 people, so why would the lender remove one of the people that was most likely required to get approved for that loan?  

If you are able to move into the home, you can do this over and over each year. You only have to occupy the home for 1 year. Each time you get primary home interest rates and low downpayment options like 5% down. That is by far the best and cheapest way to add RE. Otherwise, you can still buy with 20% or even 15% on a rental home or second home, the rates are the same for conventional loans. Main difference is PMI and min downapyment for a conventional 2nd home is 10%, rental is 15%. Both will have high rates/fees until you get to 25% down

For all the BRRRR folks that use conventional loans for your refinance, there are new rate/pricing adjustments from Fannie Mae and Freddie Mac that are going into effect on 5/1/23 that are making cash out refinances more expensive/higher rates. If you happen to be in a high cost area where we have super conforming loan sizes (San Diego, Los Angeles, San Fran, etc) - cash out refinance on those loan sizes are getting really nasty. Just a heads up, cash out refinances will look normal at 60% loan to value. 70% loan to value with 780+ credit scores its a little worse, but not terrible. But 80% cash out rental property refinances are going to be really ugly.

Maybe Non QM loans will fill that space.  If there is a need, there is usually another option that will present itself.  But, Non QM comes with already higher rates/fees, etc.

The Federal Housing Finance Agency, FHFA, the governing body that controls the conventional loan world.  Think of them as the parent of Fannie Mae and Freddie Mac.  They have set multiple new pricing grids for all conventional loans, and these pricing grids directly impact mortgage rates.  This is effective on all loans purchased by 5/1/23, so lenders may start implementing this in March or April.  FHFA changed the entire pricing grid, so while there are many many changes, here are some of larger highlights.  This only applies to conventional loans.

First, No significant pricing changes to:

1) Purchase/non cash out investment home or second home pricing

2) Purchase/non cash out Condo's

3) Purchase/non cash out of Manufactured homes

4) Subordinate financing hits (when you have a 1st and 2nd mortgage at the same time, there is price hit on the first mortgage)

Next, some of the larger changes to pricing:

1) Worse - Cash out got WAY WAY more expensive, especially over 70% loan to value and especially if your credit score is under 780.  For example, a cash out refi to 80% loan to value with a 680 credit score is going to be brutal...

2) Worse - High balance/super conforming loan sizes - got more expensive. Especially for ARM's and cash out. Like really crazy expensive. (this does not make sense to me, because these are high cost areas to live in, so they get a higher max loan size to stay conventional. These are not the uber wealthy, but they are getting hit big time now)

3) Worse - Your average borrower with a 720-759 credit score is paying more now

4) Worse - If your debt to income ratio is over 40%, you pay more now (silly rule, if we pre approve someone at 39% DTI but the underwriter changes it to 40%, now that borrower pays more.)

5) Better - 2-4 unit homes, pricing is a touch better now.  That is nice for investors.

6) Better -  borrower with a 620-699 credit score is paying less 

7) Better - 1st time home buyers within the area median income of their county get a better deal now (this went into effect a couple months ago)

There are a lot more small changes in these pricing grids, but overall I interpret this as the FHFA saying they want to make loans more expensive for anyone that has a home already or lives in a high cost area.  They want it to be more affordable for 1st time home buyers.  By looking at the numbers, I am also assuming that they want to improve the reserves of Fannie Mae and Freddie Mac so they can be in position to one day be independent of the Federal Government and end their Sponsored entity status.  That is just my personal opinion based on the recent moves...