All Forum Posts by: Brittany Minocchi

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.

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.