Rental Property Investor · Bayonne, NJ · Member since 2019 · 31 posts · 24 votes
Hello BP, I’m brand new to the Forum. Would love to actually get some advice from people in the industry. Have enough “employee mentality” family steering me away.
I'm 29, 2 years ago, Purchased a 4 family with FHA(345k). Rehabbed my "primary unit" with the intention of renting it and switching into less desirable units while I renovate. Ended up renovating 2 of the 4!
TIME TO CASH-OUT REFINANCE!!!
Here is where the nightmare begins! Went thru a mortgage broker tried FHA Jumbo, they took about 6 months just pushing my file along. First meeting was in July2018, didn't get appraisal until October2018.(635k appraised). I only got calls on Friday's since then. Was told January ‘19 the reserves won't qualify. Now all of a sudden there is an investor loan available 7.5% on a 5/1 Arm AND I CAUGHT A "TYPO" OF 4% ORIGINATION THAT WAS "NEGOTIATED" BY THEM DOWN TO 2% .
Very different from 4.5 30Yr fix ON THE ORIGINAL REFI. Or my current 3.875 30Yr fix.
Needless to say, need the cash out to repay my self back for renovation and begin my next project. It’s now End of Feb’19 and they want me to pay another appraisal for this 5/1 and no closing date in sight. 🙄🙄🙄
Have you tried contacting multiple local banks in your area to see what they can do for you?
Banks ultimately would love to win your business. With that appraisal you're only ~54% leveraged as well which is low risk for most banks.
I would highly suggest shopping around and talking with at least 3 other banks to see what kind of loans and rates they'd be willing to provide for you.
Based on your plan to pull out your cash for your next project, any refinance that allows you to still cashflow on your current 4 family while providing you with a 30 year fixed rate mortgage would be ideal.
Lender · Chicago, IL · Member since 2016 · 189 posts · 153 votes
7y
HI. I can see no good reason to do any sort of adjustable rate loan unless you know for CERTAIN you are selling in 5 years. What if interest rates are on an upward cycle in 5 years ? Usually a 5 year ARM allows a whopping 2% increase in the 6 th year if rates are higher, can you take that increased payment ?
Safe bet is to try to get a conventional high balance loan rather than any new FHA loan when you refi. I believe that even a 15 year terms FHA loan require mortgage insurance paid for 11 years. Try a conventional 75% loan so no mortgage insurance, maybe no cash out, depends on value an d what you owe. All those fees are ridiculous, there should be no "points" to pay.
Have you tried contacting multiple local banks in your area to see what they can do for you?
Banks ultimately would love to win your business. With that appraisal you're only ~54% leveraged as well which is low risk for most banks.
I would highly suggest shopping around and talking with at least 3 other banks to see what kind of loans and rates they'd be willing to provide for you.
Based on your plan to pull out your cash for your next project, any refinance that allows you to still cashflow on your current 4 family while providing you with a 30 year fixed rate mortgage would be ideal.
Rental Property Investor · Bayonne, NJ · Member since 2019 · 31 posts · 24 votes
7y
@Jorjio Hopkins thank you so much. I have definitely shopped around, and haven't found many bites. We had such a confusion during the FHA process part of my reserve was used to correct a problem in the Appraisal, and was ready for recheck, Then was broken the news, that they were looking to go the Investor Refi Route.
Rental Property Investor · Bayonne, NJ · Member since 2019 · 31 posts · 24 votes
7y
@Perry Farella I’m trying to maximize the Cash our to about 100k right now. The plan right now is to refi within these next 5 years, with my fall back always being to sell.
I’ve been able to keep it cash flowing even having one of the units “owner occupied,” although it’s a struggle. Since my first purchase was the buy and Hold, I’ll be looking to build a few flips under my belt, pay down some premium, and keep flipping to fund the purchase of Rentals.
Lender · Schaumburg, IL · Member since 2015 · 833 posts · 774 votes
7y
@Damian Seguen Wait...what? What a joke. It's lenders like that that give our whole industry a bad rap. You should not be going through an experience like that. It should be 30 days, closed, done. And even if something came up with the appraisal, your loan officer should be working with you side by side to make sure you still qualify for FHA. Don't settle for a non-prime loan with jacked up costs. There are ways my dude. You need a better loan officer to take a look. Not an order taker or a bank LO. Someone who knows how to roll up the sleeves and get stuff done.
Rental Property Investor · Bayonne, NJ · Member since 2019 · 31 posts · 24 votes
7y
@Zack Karp thank you!!! It’s been quite the headache. The new development is I needed everything in Dec to show that it’s my Primary residence, and as of yesterday I have to prove I haven’t lived there for 12 months. 🤬
Lender · Schaumburg, IL · Member since 2015 · 833 posts · 774 votes
7y
I have someone awesome in Jersey too. All across the country, I have elite colleagues pretty much everywhere. These are the kinds of rockstars that you don't find by calling banks, ads, etc. These are referral-only loan officers. Next level service and execution.
Hello BP, I’m brand new to the Forum. Would love to actually get some advice from people in the industry. Have enough “employee mentality” family steering me away.
I'm 29, 2 years ago, Purchased a 4 family with FHA(345k). Rehabbed my "primary unit" with the intention of renting it and switching into less desirable units while I renovate. Ended up renovating 2 of the 4!
TIME TO CASH-OUT REFINANCE!!!
Here is where the nightmare begins! Went thru a mortgage broker tried FHA Jumbo, they took about 6 months just pushing my file along. First meeting was in July2018, didn't get appraisal until October2018.(635k appraised). I only got calls on Friday's since then. Was told January ‘19 the reserves won't qualify. Now all of a sudden there is an investor loan available 7.5% on a 5/1 Arm AND I CAUGHT A "TYPO" OF 4% ORIGINATION THAT WAS "NEGOTIATED" BY THEM DOWN TO 2% .
Very different from 4.5 30Yr fix ON THE ORIGINAL REFI. Or my current 3.875 30Yr fix.
Needless to say, need the cash out to repay my self back for renovation and begin my next project. It’s now End of Feb’19 and they want me to pay another appraisal for this 5/1 and no closing date in sight. 🙄🙄🙄
I‘D LOVE TO SHARE MY JOURNEY WITH EVERYONE!!
FHA doesn't require reserves but of course it helps to have some. If you didn't live in one of the units how much would your rents be. If that number isn't higher than your mortgage payment plus taxes, insurance and PMI that would be the issue. Also, it's a 4 unit so it's not an FHA jumbo loan.
Your loan officer or broker has no clue what they're doing. You need to find someone that has experience with this type of loan.
Real Estate Agent · Buffalo NY · Member since 2017 · 68 posts · 33 votes
7y
The way i see it you have two options:
1. keep shopping around for a conventional loan (For 4 units it would usually be up to 75% LTV)
2. HELOC. it's your primary residence so you should be able to find some good options.
I got a HELOC about 6 month ago, 85% LTV (85% of the difference between the current mortgage to the appraised value) 2.95% for the first year and then prime +1 for another 9 years. No origination fees as long as i don't close the HELOC for 3 years.
Hello BP, I’m brand new to the Forum. Would love to actually get some advice from people in the industry. Have enough “employee mentality” family steering me away.
I'm 29, 2 years ago, Purchased a 4 family with FHA(345k). Rehabbed my "primary unit" with the intention of renting it and switching into less desirable units while I renovate. Ended up renovating 2 of the 4!
TIME TO CASH-OUT REFINANCE!!!
Here is where the nightmare begins! Went thru a mortgage broker tried FHA Jumbo, they took about 6 months just pushing my file along. First meeting was in July2018, didn't get appraisal until October2018.(635k appraised). I only got calls on Friday's since then. Was told January ‘19 the reserves won't qualify. Now all of a sudden there is an investor loan available 7.5% on a 5/1 Arm AND I CAUGHT A "TYPO" OF 4% ORIGINATION THAT WAS "NEGOTIATED" BY THEM DOWN TO 2% .
Very different from 4.5 30Yr fix ON THE ORIGINAL REFI. Or my current 3.875 30Yr fix.
Needless to say, need the cash out to repay my self back for renovation and begin my next project. It’s now End of Feb’19 and they want me to pay another appraisal for this 5/1 and no closing date in sight. 🙄🙄🙄
I‘D LOVE TO SHARE MY JOURNEY WITH EVERYONE!!
I am not going to go in to the technicalities as few experts have already weighed in with solid advice. Before I go in to the main topic , just want to tell you that , you can only collect information from professionals but you have to decide ultimately - what fits your plans . For ex lot of people see ARM s as bad , and for right reasons , but if you know you will only hold it fr one year , then that is appropriate .
Now my main advice / observation : with any type of professional , mortgage , realtor , attorney - only 10% of them will be good . My question to you is " If they are calling you every friday , and not responding to you , why didnt you fire them ? "It can be their incompetence or genuine ill will . Either way you should have asked right questions , been aggressive and took the situation in your hands. I am not saying that finding a provider to do the sort of loan that you wanted is easy , but I will be really surprised if you put in efforts and make some 50 calls , and still didnt find another broker .
You worked hard and did a great job increasing the equity , now every day , you are not taking advantage of that equity , you are loosing out , your broker need not have that urgency .
So in general , if you see the process taking longer than necessary ( with some allowance for unexpected things ) - you got to move fast . Infact you need to have 2-3 professionals in each trade , people change , they get busy , retire and so on .. if you have backup , you wont be on the mercy of this broker
See how Zach responded , that should be the attitude , to get things done . if you are not seeing that attitude - and just hear complaints , then time to switch .
Rental Property Investor · Fond Du Lac, WI · Member since 2015 · 261 posts · 78 votes
7y
@Damian Seguen whoa, that sounds like a nightmare. I’ve had a few successful refinances and it never took more than 45 days to close. Maybe I’m lucky with a good lender. Maybe me constantly emailing and stopping in their office helps. Best of luck wrapping it up!
Rental Property Investor · Bayonne, NJ · Member since 2019 · 31 posts · 24 votes
7y
@David Des Thank you for the advice David. I started the process with the same broker that helped me get the original mortgage. Went kind of blindly with them holding this could all be settled in the middle of my move to So. Florida.
I am definitely at fault here. I wanted to cut it off since October, but haven’t been in the area. Now that we are finally settled in, it going to be time to search the market better!
@David Des Thank you for the advice David. I started the process with the same broker that helped me get the original mortgage. Went kind of blindly with them holding this could all be settled in the middle of my move to So. Florida.
I am definitely at fault here. I wanted to cut it off since October, but haven’t been in the area. Now that we are finally settled in, it going to be time to search the market better!
Good luck - been in this stage so many times , this is the sunken cost philosophy ...so cutting your losses is a very under estimated skill ... But the biggest things , you got a problem which is easy to solve . If it was something to do with your appraisal and so on - then that would be much tougher . Enjoy the equity , put it to good use and repeat .
Rental Property Investor · Bayonne, NJ · Member since 2019 · 31 posts · 24 votes
7y
@David Des thank Dave! Besides this real estate being something that absolutely consumers my mind, it’s good to hear some positive on here from people that have been in it. Shows me there light at the end of the tunnel.
I appreciate u reaching out! Thank u, your advice is huge in my education!!!