All Forum Posts by: Bryan Maddex

Quote from @Chris Seveney:

Quote from @Joseph Pisano:

Any recommended DSCR lenders in Houston area in Texas? Ideally 70-75% LTV and sub 7% rate. Sub $100k loan.

 Going to be very challenging to get a sub 7 rate. 

 See above, i found 3 lenders at or under 7%. There are a few options in the sum $100k range. Over $100k it is very easy (depending on credit scores) to get under 7%. 

Also google their name and cell phone number. I would look for reviews on Zillow, Google Maps, Yelp, Experiance.com.

To look up their license history you can use nmlsconsumeraccess.com, licensed and registered Loan Officers have to report a 10 year employment history. Lets you see if your amazing loan officer was a barista just 6 months ago  ;)

Last, consider working with a broker instead of a small lender. Some brokers (like this one) work with 220+ lenders. Most lenders that I work with give Wholesale Rates (vs retail rates when you go directly to a lender).  Biggest difference will be in pricing. I do not have 5 layers of management that make my rates higher, no lender I work with pays for my office space, licensing, benefits, marketing department, compliance department....  wholesale rates can be much better than retail rates with some lenders. 

Quote from @Devin Peterson:

Quote from @Joseph Pisano:

Any recommended DSCR lenders in Houston area in Texas? Ideally 70-75% LTV and sub 7% rate. Sub $100k loan.

Just a fair heads up you will not get less than 7% on a sub 100k loan from any trustworthy DSCR lender. Servicing costs are fixed, rates get higher lower the loan amount gets. Best of luck

 Just a fair head up, I have 3 trustworthy lenders that can be sub 7%, one of them has a part rate of 6.875% as of today. If you are a broker, I would add some additional lending partners as it can be found!

Hey @Joseph Pisano

Not all Loan Officers or Brokers have access to a ton of lenders. There are in fact several lenders that can get you a sub 7% rate on a DSCR loan under $100k (and yes, they are "trustworthy" lenders). In fact, a lot of lenders will actually give you a better rate for lower loan amounts due to the reduced risk of you doing a refinance. Under $100k does limit how many lenders we can shop greatly as most lenders do have a $100k minimum loan size for DSCR loans.

Hardest part of loans under $100k is your closing costs as a percentage of the loan size. The cost to do a $75,000 are almost identical to the cost of doing a $150k loan. Just be aware.

I just quoted out this scenario to a borrower over the weekend:
$130k purchase price
30% down Payment
$91,000 Loan Size
780 Credit Score
5 year declining prepayment penalty
6.875% is the lender's Par Rate (so no discount points added, only broker fee added). 
This lender has a floor rate of 6.75% on this program (.5% discount points added to get 6.75%)
Same lender can do 6.19% with 3 discount points on their other program (plus broker fee on top) if you do want a low 6% rate.  The discount point buy down will break even in only 33 months!

I have a 2nd (very trustworthy) lender that would be at 6.99% for only .162 discount points ($147 on a $91,000 loan as an example). 

A 3rd (trustworthy) lender would be at 7% for .25 discount points or 6.875% for .75 discount points. 

So, sub 7% rate is out there with 30% down!  25% down would add .125% to the rate on the first lender. 

Things that could change your quote:
Non purchase  ( a refi or cash out refi would be higher rate or higher discount points)
Credit Scores under 780 will be higher rate or higher discount points.
Multi Unit property could be higher rate or higher discount points. 

I will send you a connection request, let me know if you want to talk further about your exact situation so I can shop up to 220+ lenders for you!

FHA 203k is an amazing product and under used! One thing to be aware of is the FHA multifamily self-sufficiency calculation which determines if a property can generate enough rental income to cover its mortgage payments. The calculation uses the following formula:

Total Rent Potential x 75% ≥ PITI (plus HOA if any).

With a 203k Renovation loan, you can also finance in your payments if you are doing a major rehab. 

Also, the term "house hacking" is generally used for your owner occupied home (renting out rooms in your primary home) and that income cannot be used to help you qualify (it is considered boarder income).  In this case, you can use Rental Income from the units that you will not be living in and that income can count to help you qualify.

FHA rates are going to be lower than conventional for you almost always, but FHA does have a 1.75% funding fee. FHA is easier to qualify for and allows for higher debt to income.

If you have not spoken to your lender already, you should also just look into the HomeStyle Renovation loan. You have to put 5% down vs 3.5% down, rates are usually higher, but if you have strong credit, your PMI cost can be cheaper than that of FHA loans. No 1.75% funding fee so conventional loans typically have less closing costs. Lower debt to income allowed as well for conventional.

The main differences (besides rates/underwriting guidelines) is what you can include in your renovation costs. FHA does not allow you to do things outside of the home like adding a fence, hard scaping, retaining walls...   it does allow you to repair things outside of the home to a limit.  Conventional would allow you to add a fence or do yard work in your bid.

I cannot lend to you personally in MA but happy to answer any general questions about the 203k or other Renovation loan programs!

Lots of loan options can close in an LLC, helocs usually need to close in your personal name. I have about 20 options we can shop for you if you like.

What really matters is how long you think you will have this loan.  If you are borrowing $150k, rates will not likely drop enough for you to justify a refinance due to lower rates. If you are borrowing $800k, rates will likely drop enough for you to refinance in the next 2 to 3 years. 

So, what is your loan size? How long do you intend to keep the property? Would you rather set it and forget it and not need to refi again or rather take advantage of low/no closing costs on this loan and plan to be more aggressive on your rate at the time of your refi?

This question never has a "best" answer, only best for your situation!

I have several lenders that will go up to 80% of the value of your home with no seasoning requirements. 75% loan to value will give you better rates, and 3 to 6 months of seasoning will open up additional lenders which can further lower your rate options available to you.

Happy to shop a bunch of lenders for you, reach out if you like!

Quote from @Aj Green:

Quote from @Bryan Maddex:

Quote from @Aj Green:

Quote from @Bryan Maddex:

Any points on that loan quote? 

What loan size and loan to value?

Was that purchase money, rate and term refi, or cash out refi?

Is this a SFR or 2-4 unit?

Need so much more info to actually be able to shop rates  :) 

No points, 110k, SFR, regular purchase financing, the house is worth around 140k. No agents involved. My credit should be the highest allowable also and I shouldn't have problems with approval.

Ok, i shopped about 80 lenders (based on Fridays rates, market is closed so no live pricing)
Conventional Full Doc loan you would be at 7.875% if you put 20% down (you said what the house was worth, but not your purchase price). 

If you did DSCR, 20% down I have a Par rate at 6.375% so you pay broker fee but no points. Broker fee on that loan size is usually 2.5-3 points. You can go up to 6.75% and get 1 point credit towards the broker fee. 

Several ways to skin that cat  ;)    

With the DSCR lender, you could close directly in your LLC and it would not report to credit. So never "better or worse" from your Credit union, just different. The better option would be depending on your priorities. The DSCR world gives us a lot of flexibility.  

Hey, the house would be worth 140k and I would pay 110k. The 6.75 rate is a conventional 30 year w low closing fees (the credit union I used last time). Dscr will be useful in the future for fixer uppers and unique buys.

No (institutional) lender will finance 100% of your purchase price as a purchase, all lenders want "skin in the game". If you buy for $110k you can finance $88k if you come out of pocket for the $22k down payment plus closing costs. 

Most dscr lenders will not do loans under $100k but if the property is not in the usda eligibility zone, the same lender I quoted above will do loans under $100k. 

If you can purchase this home with private money or seller financing and get a $110k loan, then you could do a rate/term refi right after so do a 90 or 120 day note to secure the property and get it in your name, then refi into long term debt using the full appraised value. 

Quote from @Aj Green:

Quote from @Bryan Maddex:

Any points on that loan quote? 

What loan size and loan to value?

Was that purchase money, rate and term refi, or cash out refi?

Is this a SFR or 2-4 unit?

Need so much more info to actually be able to shop rates  :) 

No points, 110k, SFR, regular purchase financing, the house is worth around 140k. No agents involved. My credit should be the highest allowable also and I shouldn't have problems with approval.

Ok, i shopped about 80 lenders (based on Fridays rates, market is closed so no live pricing)
Conventional Full Doc loan you would be at 7.875% if you put 20% down (you said what the house was worth, but not your purchase price). 

If you did DSCR, 20% down I have a Par rate at 6.375% so you pay broker fee but no points. Broker fee on that loan size is usually 2.5-3 points. You can go up to 6.75% and get 1 point credit towards the broker fee. 

Several ways to skin that cat  ;)    

With the DSCR lender, you could close directly in your LLC and it would not report to credit. So never "better or worse" from your Credit union, just different. The better option would be depending on your priorities. The DSCR world gives us a lot of flexibility.