Lender is Killing my Buzz

[Jim Macedon]

Built my first 4plex. Currently shopping for the permanent financing. I mentioned to the loan officer that I believe the building will be worth $700,000 and I want a loan for $500,000. He asked what I owe on the construction loan. I said $450,000. He says, well if you're trying to get cash out, then it's 70% LTV instead of 75%, and your rate might be higher. Like a lot of things in banking, this makes no sense to me. What does he care if I got a steal on the land or my cousin is a general contractor or I GC'd it myself? He wants a lien on a property for 75% of its market value, and that's what he's getting. Please explain the reasoning here. I mean, what if I built it for cash and now I was trying to put a mortgage on it? How would that work?

[Zack Karp]

@Jim Macedon

Your loan officer is a tool.  The Conventional loan limit for a 4-unit is $931,600.  That $484,350 limit is for a 1-unit property.  Time for a divorce and to marry up to someone who knows what they are doing.

However, the Fannie and Freddie guideline for a 4-unit cash out refi is 70% LTV max, so that part is correct.

No need for commercial if you're good with a $490K loan amount if it appraises for $700K.

And don't pay points unless you aren't going to sell or refinance again for at least 6-7 years or more.

And find a new loan officer, for the love of all things holy.  If you need a rockstar in TX, I know some, shoot me a PM and I will connect you.

Best of luck!