All Forum Posts by: Erik Estrada

 How is the bank making their money? Do they service the loan? Are they requiring opening up a checking/savings account? 

Typically most lenders will sell their notes after closing and they make their money from the fees, and the back end when they sell it. There are portfolio lenders however that do make their money through servicing, and checking/savings accounts. 

Trying to wrap my head around this. Do you happen to have a Loan Estimate to share showing this is the case?

 Perfect breakdown. 

Yes then I see why it would make sense for you to refi. The seller is basically discounting the original note and you are paying him off through the refinance.

So if I am understanding this correctly you are refinancing a seller financed mortgage into a conventional mortgage? How would you be gaining $26k in equity? Wouldn't that just mean you are paying the $26k at closing since the loan you are paying off is more than the current loan you are qualifying for? 

I would check for a NMLS number, Reviews, Presence Online, and interview them. Honestly, you can tell with one quick call, who is wasting your time and who is actually experienced to get you to the closing table. A lot of the inexperienced LOs will throw out term sheets to get you in the door and then find everything to change the terms during the process. 

It is best if the LO gets all the facts upfront and then structures the deal accordingly. Sure there are variables we cannot control such as insurance, HOAs, or the appraisal. However if you are honest, and know your property and situation well, you will not run into problems with LOs changing terms on you last minute. 

 Mid-Construction will be a challenge in this market, but doable if it makes sense. 

How much do you owe? 

What is the current value? 

When was the property purchased and for how much?

What is your cost spent to date and what is your total construction budget? 

What is the estimated ARV?

What is your FICO and Experience closing on flips and construction deals? 

I would say the better route is trying to negotiate more time 

I am trying to wrap my head around this. Why not just pay down your loan more aggressively? Shortening the loan term may make sense if you are going to reduce the interest rate as well. In this case, you are just getting into a higher rate and paying closing costs. 

They still have to pay taxes, insurance, and interest at closing. Along with appraisal and any credit report fees. So no, it is not "nothing out of pocket" to the investor. Title and escrow charge fees as well, unless the lender has their own title company and they are covering it with a higher rate. 

 I would be careful with your verbiage here as it is a public forum. 

There is always closing costs on refinances. If the lender is not charging any fees, it is likely built into the rate. Additionally you should be mindful of title, escrow, appraisal, impounds, taxes and prepaid interest. I don't think it is worthwhile to refinance from a 7.99% loan to a high 6% loan, unless you are getting some cash out to payoff high credit card debt or use the money to buy another rental. I would hold on tight until market conditions improve. 

 Have you tried calling local credit unions/banks? 

What is your current LTV now? Additionally what is your current rate?

DSCR will be the easiest route. But you will also need to make sure it makes sense to refi since rates are slightly higher on these.