All Forum Posts by: Zach Wain

I think those are competitive quotes.  Everyone loves to throw around rate - but a lot of people do not mention the discount points and prepay term.  A 5 yr Prepay on a high interest rate that you may want to refinance in 1-2 years does not sound like a great idea.

Be wary of the Prepay!  I recommend a 1-2 yr PPP timeline.

I would not sell this unless you wanted it, but for comparison I can do a 80% loan to value 5yr PPP DSCR loan 30 yr fixed is at 7.75% with 3% in points today. But I would rather sell someone a 8.5% 30 yr fixed with a 2 yr PPP and 2% in discount points.

Higher rate, but less fees, and the ability to get out of it sooner.  I did not comb all of my investor options to make sure that is the best I have, but a quick example of focusing on costs and the PPP term.

Good info Jay, I was always taught the servicer can use the acceleration clause if you move to a LLC, but it looks like Fannie is ok with the change post closing

Yep, as mentioned, a lease on your departing residence and any lender can use 75% of the gross rents to offset some or all of your mortgage payment.  If you have individual/room by room leases that is fine.  You should be good to go!

@Burt L. - a conventional loan can not close/hold title in a Trust. Fannie/Freddie requires title to be held by a natural person or a revocable trust. Their guidelines do not allow title to be held in a LLC. If a bank closed a loan in a LLC, it was not a conventional loan, it was a portfolio'd loan. Otherwise, DSCR etc will do it

The best path (if moving is an option), is to buy a new primary home with 5% down and go conventional. Rent out your existing home. Primary home loans require less down, have lower interest rates, lower PMI, and its the best overall financing option.

You can put 10% down on a second home, that is fine for conventional. Rates and fees will be high right now no matter what you do. What everyone forgets to mention (because people like to sell DSCR loans), is the majority of DSCR loans have prepayment penalties. So even if the overall payment and costs are not that different, throw a 3 yr Pre payment penalty into the mix for a DSCR loan and that is a show stopper for me.

If you can go conventional, do it!  Better overall terms, just find the right lender with competitive pricing.

@Christian Blumel - You can put as little as 10% down for vacation homes and 15% for rentals, but putting 25% down gets you the best financing terms. 20% down is allowed on a rental, no PMI, but the rate and/or the closing costs are lower with 25% down. That is likely what they were referring to.

@Joseph Kehoe - if you own a primary home in Canada, you should be fine to get a DSCR loan in the States. Most lenders will require some sort of VISA, and usually some reserves in a US FDIC insured bank. I can dive in deeper if you would like

DSCR will be the only option, but its definitely possible

@Matthew Tyson - We do not require seasoning for a DSCR delayed financing scenario. Let me know if you would like some info.