All Forum Posts by: Dennis Muno

The way to know what you qualify for would be to get prequalified/pre-approved. Almost similar but a pre-approval will tell you exactly how much house(in $ amount) you are qualified to buy

Give multiple lenders a call. I would say the best HELOC is the HELOC with the best rate and terms for you. Not all HELOCS are same. Some may be variable, others not.

How is the lender not charging you an origination fee? Doesn't smell right. Legal fees too?

Ask the lender for a loan estimate( and or fee worksheet) before you continue. Too many things already seem fishy.

Ask how much the title fees are. Please get a loan estimate before you proceed so you don't get burned

Quote from @Account Closed:

I signed "Uniform Residential Loan Application" on May 18, 2023, and locked in a 6% conventional loan mortgage rate with 0 points.  On Friday June 16, 2023, one business day before the closing date (closing is 6/20/2023), the lender sends me the final Closing Statement which says the rate is 6.375% and the point is $3,785.  The lender says the point is refundable but I need to pay on the closing day.  With regards to higher mortgage rate, apparently I had some issues.   The other items were also higher - the appraisal report and credit report fee were $300 higher than the original estimate.   During the whole month, the lender did not tell me the rate was changing and the fees were going to be higher.   Is this legal?  Is there anything I can do to make the lender honor the original rate and no points and pay lower appraisal/credit report fees?  If the point is really refundable, that will help, but this lender's practice is so shady and I'd rather not fund it upfront. 

 Unfortunately, I would say you got baited. Some lenders because they want to lend to you and well get their origination fee will give you a very low rate and not tell you how much you need to pay to get down to that rate. They also have not been honest. 

If you can drop the process, drop the process. Did they give you a loan estimate? Also, once they locked the loan, why is the rate changing? They are being shady and if you can stop the process please do. Also, ask them for how much it will take to close. It looks like there are so many undisclosed fees

Hello Zach,

So for the financing options I believe it is impossible for both you and your partner to be guarantors. This should be lender dependent but I don't see why you won't get lenders who do that. In fact, with two guarantors, the risk is reduced and your rate could be lower because of that(lending and loan pricing available is based on risk).

Both you and your partner, should be able to guarantee the loan and apply for the loan jointly. 

Regarding receiving funding under an LLC and difficulties: Banks/lenders will usually ask for your articles of incorporation, check credit, depending on loan type, will ask for reserves, require some insurance just to make sure your risk is acceptable for them to loan to you. If you have these things, you should find some lenders who will lend to you.

I will also recommend that when you want financing, you should call multiple lenders and shop their loan pricing before you settle on a lender and loan product. Better yet, you can engage a local mortgage broker and have them shop multiple banks/lenders and provide you with options for you to decide.

Best of luck to you!

Why a HELOC and not a DSCR refi? HELOCs usually at start have a fixed rate and then a variable rate. A DSCR refinance will allow you to do a refinance at a better rate usually than most investment properties, you can get a fixed rate DSCR, and you don't need personal income to qualify(usually property income and if it can pay for property expenses and credit).

DSCRs are usually about a 1% more in interest than regular residential loans(which is not bad for an investment property) and if you want you could buy down your rate if you want to and have the money, usually.

I would recommend you consider a DSCR refinance instead. With interest rates so high rate a DSCR seems a better alternative. That being said, this approach would work best when you have a tenant(either long term or medium term) in your current home you want to use as an investment property. For a cashout DSCR refinance, you will need to show proof of rental income.

I would say though that you whatever loan product you want(HELOC or DSCR cashout refinance), you should have the mortgage broker you are dealing with shop around and try to present you with the best offer out of the many bank/lenders he will be searching from.

Best of luck to you!

Nope- I haven't worked with them before. However, I would recommend that you shop around multiple local lenders for a HELOC before you proceed. That will increase your chance of finding the HELOC with the best possible terms and financing available to you based on your FICO, equity in property, etc(loan pricing is based on factors like these, and risk)

Good luck!

Hello Charley,

The only way to get loan options of the kind you are looking for, would be to shop around lenders, or better yet, call a mortgage broker to do so for you. Mortgage brokers usually are partnered up with 5+ lenders and are able to shop all of them for options for you.

I believe once they get looking around, they shoul find some options for you.

Quote from @John Huegel:

Hello. I recently won a bid on a sheriff sale property in the Youngstown/Warren area. I had originally planned to fix and flip the property but due to the location (near a lake), I am considering fixing and holding it (rent and refinance). One of the lenders I spoke with suggested a "fix and hold" loan (vs "fix and flip" loan) which can then be converted to a traditional mortgage, eliminating or reducing the seasoning period.. This lender would not finance the project due to being designated as a "rural" property (although it is not). I also do not have many official flips under my belt, therefore, I have been rejected by a few lenders due to that.

Can anyone offer advice on how to finance this project and/or lenders that might have more relaxed lending requirements?

Thanks in advance!

John

Hello John,
I would say the more lenders you talk to and ask for pricing, the better for you. I would recommend you contact a mortgage broker near you. Unlike your regular bank/lender, they should be able to search 50+ banks/lenders for you to provide you with options.

The more financing bids you get, the better for you. Some might have much relaxed lending requirements that will work for you. Best of luck!

So, for DSCR loans- no. You won't get approved especially when there seems to be a lot of rehab that needs to be done. Anyone that tells you you will be approved for DSCRs is likely wrong.

At the underwriting stage, the loan will not be approved. The appraisal will give you away.

It looks like the pathway for you could be a hard money/ fix n flip/ an investor or any short term loan(rates will be higher but once you complete with tenants in property, you can refinance) loan to buy and rehab the property. Once you get tenants in the property, a DSCR refinance would be perfect for you. Rates are usually a point more than residential mortgage rates and you can buy down your rate usually to reduce the monthly mortgage payment on the property.

For DSCRs, your personal income is not considered. Aside credit and appraisal, lenders want to know if the monthly rental can at least cover the monthly PITI(principal+interest, taxes and insurance). Lenders usually lend to anyone with a 1:1 ratio and will lend to those who rent does not cover the monthly PITI but your rate will be much higher because lenders will consider this high risk.

Best of luck!