I just did my research this week with about 6 possible lenders for a cash-out refi on a rental property and after gathering all the info I could, it looks like the two best options for a loan of around 100k would be either LendingHome or Lima One Capital based on their rates, costs and documentation needed.
Has anybody funded with either of them this year? If so, which one was it, and how was your experience?
1. Total cost of capital: Going beyond just interest rates and points, what are the fees that each are charging? What are all the costs involved? Try to get a true apples to apples comparison of the two quotes that you received.
2. Leverage: Some investors look for maximum LTV, while others look for optimal LTV. Does one offer better leverage for you?
Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
5y
No experience with LendingHome but have had great experience with LimaOne over the years including this year, 2021. Quick, easy, no drama solid rates and programs.
1. Total cost of capital: Going beyond just interest rates and points, what are the fees that each are charging? What are all the costs involved? Try to get a true apples to apples comparison of the two quotes that you received.
2. Leverage: Some investors look for maximum LTV, while others look for optimal LTV. Does one offer better leverage for you?
Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes
5y
Not asked about lender,,, I just closed 2 loans with finance of america. I dropped my LTV and have a high FICO and bought down the interest rate to an astounding 3.5%. BUT BUT I don't recommend Fin of Am today going forward. My investor friends have used Fin of Am prior to some recent event, a friend heard they went public, and post this event they are completely misserable to deal with. Good and very likable front end folks, but their nut-case new under writing dept are (explicatives) and my loan took 4 months FOUR misserable months for both of 2 loans. A 3rd is stuck sideways with a dirt simple title flaw any investor closing attorney could close with their eyes closed. A missing mortgage satisfaction just prior to a forclosure deed being filed. I have my settlement statement buying from HUD (foreclosed). I'm here researching Lending Home to move this stuck 3rd loan. My friends swear they'll never use Fin of Am again, even with other DSCR lenders at higher interest rate. There's the cost of ones brain cells, my blood, and lost opportunity of a 4 month closing vs a 30 day closing. Best to all.
Not asked about lender,,, I just closed 2 loans with finance of america. I dropped my LTV and have a high FICO and bought down the interest rate to an astounding 3.5%. BUT BUT I don't recommend Fin of Am today going forward. My investor friends have used Fin of Am prior to some recent event, a friend heard they went public, and post this event they are completely misserable to deal with. Good and very likable front end folks, but their nut-case new under writing dept are (explicatives) and my loan took 4 months FOUR misserable months for both of 2 loans. A 3rd is stuck sideways with a dirt simple title flaw any investor closing attorney could close with their eyes closed. A missing mortgage satisfaction just prior to a forclosure deed being filed. I have my settlement statement buying from HUD (foreclosed). I'm here researching Lending Home to move this stuck 3rd loan. My friends swear they'll never use Fin of Am again, even with other DSCR lenders at higher interest rate. There's the cost of ones brain cells, my blood, and lost opportunity of a 4 month closing vs a 30 day closing. Best to all.
Interesting take on FAM. They are one of my favorite lenders to send loans to. They do over condition a bit, but pretty responsive to getting the conditions checked off. Great communication and good execution. But that is a benefit of being a mortgage broker vs their retail branches (they know if they don't perform we will send our business elsewhere, their retail loan officers don't have a choice), and being one the biggest mortgage brokerages in the country (if they drop the ball, they will lose a ton of business).
Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes
5y
@Jesse Rivera A fellow investor hasn't closed a REFI he started with the same inside FAM lender here in Atlanta, back in March, M A R C H. he thinks he'll close in a week. Mine was a full 4 mo, crazy. Just doesn't make business sense to use FAM (these days) unless you have thick skin, don't mind dripping water torcher, have no immediate need for the proceeds... ;(
I punched in lendinghomes simple to use loan calculator / app process. Lower max loan, higher interest rate then FAM, lendinghome maxed out at $140k loan amount for my >760 fico, and the value of the rental didn;t seem to mater it was a hard limit of $140k, my guessing. The home value was $250k for an LTV of 0.56, gave me a 4.25% rate, insanely great for a rental loan. Fees seemed in line for these DSCR lenders. I think my MUCH higher fees at FAM was my buying down points to get 3.5%. I was told break even for the extra up front fees is just over 5 years for 3.5% vs 3.85 vs no points (or lower points) for 4.25.. I also dropped my LTV (raises the DSCR) to get into the 3.5% as well, thus reducing my cash out.
If a 3rd loan with FAM can't be saved, stuck with a simple title defect any investor oriented closer can insure around (missing satisfaction of mortgage on a house that was forclosed. LOL what stupid glitch by FAM underwriting), I'll move that to lending home.
FWIW to all, Maxing your LTV, cash out is not always smart. Because it reduces your DSCR (safety), cash flow.. Which is one reason why I dropped the LTV on these loans, but also to get into the lowest interest rate. Also, We have few loans vs doors since alot of our doors are owned cash inside solo-401ks (like a SD-IRA) so our total debt risk is low.
I worry that new folks max out the LTV just to scrap the last nickle back from a deal.
Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes
4y
@Kerry Baird My first post said do not use Finance of America (long list of why) and that my 3rd cash out REFI of a house that FinOfAm gave up on due to their idiots in underwriting. Lendinghome.com is my highly recommended DSCR/non-QM rental 30yr fixed lender. Automated, fast, low fees, decent interest rates. I chose 65% LTV to max minimize the interest rate. With so much equity even 65% LTV of a new appraisal got me $90k net. Its sitting in a big pile waiting for good deals this year and next.
Borrow when you don't need it, to put it to use when you CAN"T BORROW IT during a down turn. :> Borrow NOW just my views. good debt is paid for by the tenant AND if you stick to DSCR >1.3 ideally 1.4 you are taking on safe debt in my view. Plus across our portfolio our LTV is somewhere around 30%, we have alot of rentals in solo-401ks no debt (like SD-IRAs only better, if you qualify for a solo k).
Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
4y
@Curt Smith, thanks for your quick response. We have a similar portfolio with a bunch of paid off houses, not in a retirement account, but under a holding company and individual houses are owned through a series LLC. This makes the equity difficult to access. Having been through the last boom and bust cycle, I totally agree with you about getting the funds out now, when money is "easy."
As @Curt Smith mentioned, a Self-Directed IRA or Solo 401k can be a great way to acquire more real estate. While there are some rules to watch our for, such as prohibited transactions, there are also additional tax benefits, and if you have existing retirement funds locked into traditional assets such as stocks, these self directed structures can give you much more control and flexibility. There are a few self-directed IRA snd Solo 401k providers here on BP. If you are interested in learning more then I would suggest that you reach out to a few to see if these structures might benefit you.
@Curt Smith, thanks for your quick response. We have a similar portfolio with a bunch of paid off houses, not in a retirement account, but under a holding company and individual houses are owned through a series LLC. This makes the equity difficult to access. Having been through the last boom and bust cycle, I totally agree with you about getting the funds out now, when money is "easy."
OBTW Kerry, read up on 30yr fixed DSCR/non-QM (commercial) loans that can cashout REFI leaving deed in the LLC. I just did 3. Here's some lenders you can google for contacts. BTW DSCR lending is asset based lending based on the rent vs PITI (DSCR) not your DTI or 1040. So only a min FICO (??) and just basic ownership/insurance/mortgage docs for underwriting.
- Finance Of America, did 2, everyone of late I've talked to said it was a miserable and LONG closing and they (and I) will never use them again.
- Lendinghome.com (now kiavi.com) automated loan request, 30 day close, easier underwriging and docs. They do hard money too.
- Lendingone.com, terms sheet suggests lower fees then kiavi. not used but will be calling.
- limaone.com, both hard money and these 30 yr DSCR loans. Will check their fees too.