cash out refinance investment property

[Andrew P.]

We want to do Cash Out Refinance which the title would be in the name of a LLC, currently creating, and we are looking for all term options greater than 15 year. Has anyone worked with a lender that will do this? We have only found lenders that will do a 15yr note.

[Jacob Sherman]

A no income no doc DSCR (debt service coverage ratio) would be a great option for you . It comes in a 30 year fixed option . What type of property do you have ?

[Andrew P.]

its a SFH

[Andrew Zamboroski]

Quote from @Andrew P.:

We want to do Cash Out Refinance which the title would be in the name of a LLC, currently creating, and we are looking for all term options greater than 15 year. Has anyone worked with a lender that will do this? We have only found lenders that will do a 15yr note.

A DSCR loan should fit the need, we do these for clients all of the time on 30-year loans.

[Stacy Raskin]

@Andrew P., there are lenders who do fixed 30 year DSCR loans and some lenders who do a 40 year fixed term with 10 year interest only converting to a 30 year fixed for purchases and refinances.

Some more info on DSCR loans:

DSCR loans won't use your income to underwrite the loan.

DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.

Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.

4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.

I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350, Insurance = $100, Association Dues = $50

Total PITIA = $2200

Rent = $2000

DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250, Insurance = $100, Association Dues = $25

Total PITIA = $1875 Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

[Chad Davis]

@Andrew P. DSCR loans provide a 30 year option. Happy to chat further.

[Dulce Davis]

I'm also in Texas and do only 30yr mtgs on my homes. Latey Ive been doing Delayed Financing, which is buy and rehab on cash, then finance within 6 months of purchase. There's lenders that can do both hard money and long term, those sometimes give you a little rate break on the long term side when u do the hard money up front with them, and I've also done conventional financing. All were 75% LTV. Once rates go down I will refi the ones with the higher interest rates. Make sure when you're researching to ask about prepayment penalties. That will destroy refi plans. Also, be aware the lender's appraisers have also messed up my LTV numbers. I've begun a list of appraisers not allowed on my properties, and will now begin having my own appraisals done to see if it helps me win against bad appraisers. Good luck!

[Andrew P.]

thanks for the info

[Jay Hurst]

Quote from @Andrew P.:

We want to do Cash Out Refinance which the title would be in the name of a LLC, currently creating, and we are looking for all term options greater than 15 year. Has anyone worked with a lender that will do this? We have only found lenders that will do a 15yr note.

 @Andrew P. You should have no difficulty finding a 30 year fixed/ 30 year amortization for an investment property vesting in your personal name or LLC either using full documentation or DSCR. We do it every day in Texas.

[Matthew Crivelli]

Quote from @Andrew P.:

We want to do Cash Out Refinance which the title would be in the name of a LLC, currently creating, and we are looking for all term options greater than 15 year. Has anyone worked with a lender that will do this? We have only found lenders that will do a 15yr note.

We would be happy to take a look! 30Y fixed is 100% obtainable. 

[Brayden Hrycko]

Hey @Andrew P.,

As others have mentioned, Dscr would be a good option. I'd be happy to give you options. Feel free to reach out. 

[Carrie Matuga]

You can do a DSCR on a 30 year term, either as a 30 yr loan, an ARM or even as partial interest only for the first 10 years.

[Kevin Romines]

Here are your options in order of what will give you the best terms. 

1) Fannie Mae cash out refinance to 75% on a single family residence or 70% on 2-4 units. Fannie Mae allows a borrower to transfer title to the property to an LLC that they are the majority members of after closing without it violating the due on sale clause. They changed that rule to allow this on 6/1/2016. This will give you the best interest rates. You will have to do the loan and title in your personal name and then switch it to the LLC after closing. So if the title is currently in the LLC, you will need to rerecord it in to your personal name to do the loan.

2) A Non-QM loan such as a bank statement loan or a DSCR loan. The bank statement loan will give you rates about .5% better than DSCR but you must be self employed to do that loan. Or do a DSCR loan typically up to 80% LTV but higher rates than a Fannie Mae loan.

I hope this helps?

[Erik Estrada]

Quote from @Andrew P.:

We want to do Cash Out Refinance which the title would be in the name of a LLC, currently creating, and we are looking for all term options greater than 15 year. Has anyone worked with a lender that will do this? We have only found lenders that will do a 15yr note.

Most DSCR lenders will be able to help with a 30 year fixed loan.