All Forum Posts by: Brittany Minocchi

Hi Dalton! 

Not sure when you purchased the property, but keep in mind conventional loans require 12 months of seasoning before you can use the appraised value for a cash out refi. Assuming you've met that, your original loan amount was ~$364,500 with 10% and a purchase price of $405k. If you cash out at the 80% LTV conventional max (assuming it's a single unit) and your new value is $575k, that makes your new loan amount $460k. That's enough to pay off the original loan and pull the $85k you had in rehab costs, with a little left over to cover your closing costs for the refi.

Do you have an immediate need for the ~$85k you'd be pulling? What is your current rate? How long do you plan to continue living in that property? There are a lot of variables....I will say I don't usually advise to wait for rates to come down. There's no guarantee that they will, and there's a cost to waiting. 

What's up Maria!

I'm in Ohio, happy to chat if there's anything I can help with (including restaurant recommendations if you happen to find yourself in the Akron/Canton area)! 

Check out Ohio! We have a reasonable cost of living and properties are significantly less than CA. A $100-$200k down payment would get you a decent multifamily property, possibly with land depending on where you look. 

I'm assuming you mean appraisal and not home inspection, and if they ARE saying it's from the home inspection, that's crazy. Almost 1% is a big jump. 

Usually when a rate is locked, you're given a rate lock confirmation. In the nonQM world this doesn't always happen. It depends on the lender. If you're not in a hurry and/or don't trust the lender at this point, it might not be a bad idea to check out other options. Usually an appraisal can be transferred to a new lender, so as long as it wasn't completed 90+ days ago, it should still be valid. Your closing would just take a bit longer. Depending on terms and overall cost, 7.8% may not be super competitive. 

Can you qualify full doc (meaning with employment history, income, DTI, tax returns)? If so, I'd look into that before a DSCR loan to avoid the prepayment penalty DSCRs carry. If you can't qualify, DSCRs are a good option but I normally advise to stick with a 3-year prepay (or less, depending on pricing). Closing in an LLC is also allowed with DSCRs if that's a concern. If you have an immediate need for a large sum of cash, I'd lean cash out. If not, then I'd explore a line of credit, but that will also be a full doc qualification and you'd still have that variable interest rate. Happy to chat if you think of any other questions!

Welcome Allen! I'm also in Ohio, a little further south. BP forums are a great place to learn. Happy to connect if you ever want to chat! 

Nathan made some great points. To add to that, you also want to consider the potential appreciation and cash flow of the new deal. But like he said, f something goes wrong with ANY of the properties you have debt on, you might be in a pickle. It all comes down to your tolerance for risk. If you own either of the properties free and clear and don't need to access all of the equity to make the next purchase happen, that would be ideal. Look at the values of your 2 properties, consider any outstanding debt, calculate what your payment might look like on a cash out refi, compare that to current or potential rents. Research current or potential rents for the new deal and make sure it'll cover the debt you're considering taking on. It also depends on whether your next purchase is a rehab, turn key, flip or hold. The length of time you're carrying debt is a factor to consider. 

Commercial appraisals are expensive, $5,000 isn't out of the ordinary. Unfortunately no one is going to guarantee that they'll make you a loan; there are too many things that can pop up outside of the lender's control. Something problematic they find that was undisclosed on your application (not saying you'd do this, just giving an example), title issues, entity issues, issues with the appraisal even if the value is acceptable...you can either bite the bullet and pay for the appraisal, don't move forward with the loan, or try and find a HML/PML willing to lend to you without an appraisal.