Conventional Financing questions

[Mike Lee]

Okay I went today to the bank just to get an idea what I may borrow. I mentioned to the loan officer that it will be NON owner occupied. I told her my intentions of buying a duplex or SFR and renting out. I was told a minimum 25% down & ~6pts for all closing, attorney fees, etc. I also asked if I should buy in the name of a LLC she wasnt really clear, but basically they want the property to be under my name. I asked if later on I could transfer title of property into LLC she mentioned that the bank states in their contract that they would have to approve, and that there will be another fee for that (she didnt specify). I asked if I could buy fixer upper with private lender and then refi after repairs are made she said yes after 6 months seasoning and NO Cashout.

1. Are you guys buying under your name and then transferring title to an LLC later on?

2. Is it possible (or legit) to buy as a personal residence and rent out?

What are you guys doing?

[Jon Holdman]

The six points is outrageous. One point origination fee, along with another 2% or so for other closing costs. If you want to buy down the rate you can usually pay extra. Not sure where those three extra points are going.

You're always going to have a higher rate for a NOO loan. Its just the way it is.

Can you buy and claim its OO, then immediately rent it out? Maybe. But you'll be asked to sign a form stating you intend to occupy it. If you don't, you're lying on the paperwork to the bank, and most likely in default.

Very difficult to get conventional loans under an LLC, even with a personal guarantee. You're really looking at a commercial loan to do that.

You should ask if the refi would be base the value on a new appraisal or if the value is what you paid. You should be able to find a lender who will do a rate and term refi after six months based on a new appraisal.