All Forum Posts by: Chris Kendrick

@Chris Kendrick how about a DSCR option loan

 Then that is not a conventional program. they would have their own guidelines around delayed financing and it apparently is waiting a year.  Pro's and con's and can not always have it all.  

yes, you can when paying with cash with the limitations I mentioned above. You can hypothetically do an ARM but you will not want to as conventional non-owner occupied ARM's will be higher then the fixed rate and conventional does not allow interest only. You could do those things with a DSCR but again there are negatives with those loans as mentioned above.

 The way delayed financing (Delayed financing is only available if paying cash)  works for non-owner occupied is that you can get back UP to what you paid for it plus closing costs/pre-paids. I will use numbers of a delayed financing we just closed: Purchase price 150k. Improved the property, and the new appraisal came in at 209k.  This was a non-owner single family so max cash out on delayed financing or any cash out loan is 75% with fannie/Freddie. So, we can lend up to 156,750 as that is 75% of 209k.  150k was the purchase price plus 6750 of closing costs and pre-paids into the loan.   

The above is for conventional. You can also do a DCSR loan within 3 months. The rate will be higher but not a huge amount higher. BUT, you will have higher closing costs PLUS pre-payment penalties up to 5 years on most DSCR products. Maybe no big deal if you plan on a long term hold, but quite costly if rates do drop in the next few years as the bond market is predicting. DSCR can be a useful product, we do a lot of them, but the pre-payment penalty should not be glossed over. A conventional loan will NOT have a pre-payment penalty.

 I see you don't lend to NC

And keep in mind these new Fannie/Freddie seasoning requirements ONLY apply to cash out loans. In other words, you can still use the improved value to refi what is owed with no cash back.

So, what we do is a double close essentially. We do a cash out loan for you on a bridge loan with no pre-payment penalty pulling out the cash, them immediately refi that new loan amount as a rate/term into a conventional loan for the lower rate/no pre-payment penalty conventional loan. So, again, it just takes a good LO, and a plan.

 @Chris Kendrick   Credit unions are not going to be the best place for something like this. For example, we have a program that we fund out of own balance sheet that will allow you to pull out funds using the improved value right away. No waiting period at all.

 I am a little bit confused in this aspect as well.

Is this SF rental? is this a DSCR rental or conventional ?

Even with conventional the number is bizarre.