All Forum Posts by: Brittany Minocchi

Fannie/Freddie now require 12 months of seasoning for a conventional cash out refi in order to use the appraised value. For anything less than that with a traditional bank or credit union, you'd likely be looking at a portfolio product (the bank/CU will hold your loan and not sell it on the secondary market). However, many investors get around this with a debt service loan. There are lenders with no seasoning requirement as long as rehab has been done to support the new appraised value, up to 80% LTV (although 75% is much more common). You can also close these types of loans in an LLC if that's a concern. Hopefully that helps, feel free to reach out!

Not sure if these are all investment properties or if you're including a primary or second home, but my suggestion would be a cash out refi of an investment property to pay off your debt, and a line of credit on your primary to have available for reserves if needed. It's much easier to get a HELOC on a primary home than on an investment property, and terms are better. It's not a bad idea to use equity to pay off high interest debt but I wouldn't pull cash just to put it an account if you don't really need it for anything right now.

Based on a value of $165k, 75% LTV would make your new loan amount $123,750. After deducting your payoff, you've only got a little left over which would go toward covering refi costs (and you'd likely come up a bit short). There are a couple of lenders that'll go to 80% which would be better, but still wouldn't give you anything to work with as far as paying down property B. If 3 properties are a bit too much to handle right now, you could sell one and focus on the other two like others have mentioned. :)

3-year PPPs are usually reasonably priced while also shaving off those extra 2 years...if you drop below 3, rate/cost can get a little gross. You'll either have a higher rate for no prepay, or it will cost you points at closing. I'd compare the cost of the buyout vs. the penalty you'd get hit with IF you refi or sell. 

Can you swing both payments (in terms of DTI) if you were to buy another duplex with conventional financing and use the rental income from both units of your current residence to qualify? You'd need to show the income on your tax returns and/or have a lease and first month's rent/security deposit for the unit you were living in. Also depends on what you mean by modest income and bad credit....

Worst case like someone else mentioned, you could stay in this property and buy the next with a DSCR. It may be possible to get away with 15% down instead of 20% depending on the scenario.

Assuming the ARV you mentioned is accurate, at 75% LTV you'd be able to pull enough equity to cover your existing payoff, refi costs and walk away with a good chunk of cash in your pocket. If you don't need the extra money at closing and just want to pay off your current loan in hopes of a better rate, you could consider a rate term refi instead.

If you have a 3-2-1 prepay, you'd lose $3,240 paying off your current DSCR (this would apply to a refinance OR a sale). If you're keeping the property and renting it for $2,900/mo, you'll make that $3,240 back pretty quickly. I'd then look at the interest savings vs. the cost of the refinance + penalty and see how long it would take you to recoup those costs. 

I hope that helps :) 

Very lender dependent. Some only look at the credit of the guarantor, some look at all members and/or require them to be guarantors etc. 

75% LTV is the cap on cash out with many (but not all) lenders, so I'd make sure you have a viable option for 80% before you make your decision. However, I'm guessing the reason you're saying you need to wait 4 months is because of a required seasoning period? If so, up to 80% LTV with NO seasoning is available assuming you've completed rehab and the property is in an eligible state (some lenders have different max LTVs based on the state the property is in). Without rehab, you're likely stuck waiting 3-6 months minimum.

The only up front fees you should have are an appraisal and credit report. Anything outside of that I’d be weary of, there are lots of scammers out there.

Conventional financing doesn't allow you to close in an LLC, so if this is a must, DSCR is a good option. You don't necessarily have to pay points for the rate, but you'll very likely be charged an origination fee. These loans are structured a bit differently than conventional loans; the borrower pays the origination to the loan officer instead of the lender paying them, so it's an up front fee. Same thing with the underwriting fee. If paid by the lender (this is common for conventional financing, especially with retail lenders), the origination and/or underwriting fee is "baked" into the interest rate, therefore giving you a higher rate in exchange for lower out of pocket costs. There are some DSCR lenders that allow this structure, it just depends on what your goals are.

Rate will depend mainly on the structure I just went over, your FICO and the length of the prepayment penalty. The longer the penalty, the lower the rate. Up to 5 years is typical, but you could buy it out completely if you wanted to. Some lenders may require it depending on what state you’re in.

Hopefully that helps a bit, feel free to reach out if you think of any other questions! 
 

That is correct - FHA only allows for long term rentals, anything less than 30 days is considered transient and is prohibited. If you can do midterm rentals with a 30 day minimum, that should work. Or if you only plan to live in the property for a short time, you could do a 1-year lease and refinance into a conventional investment loan, which would then allow you to do short term rentals. FHA requires 3.5% down, conventional requires 5% if you're occupying a unit of a 2-4 unit property.

There are loans available that don't require income or employment history to be verified and/or use projected STR income, but you can't occupy the property. It would have to be strictly an investment property.