All Forum Posts by: Ben Carmona

One of the questions I have is how low are these properties priced.
Since many investors are finding properties 60% below market value, will these properties cash flow?

Couple additional points about financing. As mentioned the pricing on this loan could be high, however taking a higher rate could minimize part of those 4 points. Highest rate would be around 6.75%.
Beyond the pricing adjustments for â€investment†and â€no PMIâ€, there's usually additional adjustments for credit score, state, and loan size. This could make it even more expensive.

A lot. Do a search m here,

You may have missed that I mentioned banks will have higher rates than brokers. If the banks save you several hundred (even a thousand
) dollars the rate will cost you more long term.

Shop it though.

Yes,

found their services several months back. spoke to owner who could not give any referrences. introduced a client prospect to them and we had a conference call. all sounded good but had further info found online which suggested to stay away from this company. not one person could reference anyone that successfully closed. client decided not to move forward.

Have referred clients who have succesfully closed. Do you need a source?

all looks ahout standard..sounds like you're using a broker

origination fee is going to the broker.

discount should be going to the lender in order to get that rate...if you dont want to pay discount take a higher rate.

mortgage brokers use processors to do the paperwork and interact with the lender, title co, and appraiser. Banks wont usually have this because their employees are paid salaries to work at the bank. (however, banks will have higher rates than a broker) $450 is probably below average.

sometimes (very seldom, brokers will submit to a lender that charges and underwriting fee & admin fee). If yours is normal A paper loan then I dont see that the lender would be charging this. Broker is probably charging it.

Misc title fees not controlled by the bank. You can probably call the title company to negotiate.

Most companies will try to make about 2% of the loan amount per transaction. So that would be about $6000. Seems that they are lower than norm by only charge $3600 in origination + admin fee.
You may be able to discuss admin fee with them but I think you're getting a good deal.

Rental Income Requirements on properties 5-10.

OK..just spoke to Fannie directly to clarify rental income

She said Fannie is definitely saying that if you own properties and want to be able to use income from them to offset the mortgages that you MUST have 2 years of tax returns. If you dont, the full payments will be counted against you for all those units.

We also discussed the subject property rental income. The announcement does not say what is required for rental income. In the past, you could use 75% of the rental income after showing a 1 year lease. The rep there definitely thinks that this is not so for properties 5-10. So the subject property whether purchase or refi could not have rental income included in the calculation.

This last part she was going to confirm when she meets with the credit committee this week. I explained that the guidelines are very vague on these issues. She thinks we should see a new update clarifying this soon. Maybe after discussing more they'll see that this will be very tough for almost any investor.

- side note 1 - She also mentioned that there is not a 2 year landlord history for investors. So if you're doing properties 5-10 and dont have 2 years tax returns for 1-4 and your income/assets fit the new qualifications you should still be ok.

- side note 2 - Fannie does not have a seasoning period for rate/term refinances or purchases. Any lender having these has their own internal overlay

Ok. Not to beat a dead horse on the subject because I think we're all in agreement that HML have a place/time in options. This is how I read it:

About the 10%. I was referring to down payment, not rate. Many HML are wanting money at closing now. Fannie investment loans require 20% down. Sorry for the confusion.

Cash out means to get additional cash back whenver you refinance a loan. So if you owed $50k on property one you would refi at $100,000. Payoff the $50K loan and have an additional $50k in hand. 30yr fixed rate.

You'd then use the extra $50k to pay down your other property.

Streamline means that there is very little qualification needed, including no appraisal. Unfortunately though if you went the streamline route you couldnt do the cash out as above.

FHA typically doesnt not allow investment property financing. Only time they do is if you are doing the streamline "no cashout" refinances. Rate on this should be really good at 15years. You could then go to a local bank and should be able to get a line of credit to pay which would help pay down the balance on property 2.

Where do you live? You really do need a mortgage professional to run these #s for you.

I disagree that only people who cant qualify for conventional financing use HML. I've had many clients that chose to use hard money because they didnt "feel" like hastling with conventional or bank loans. They most certainly would have qualified. Now had private money been available such as Nationwide has then obviously this and the Rich Uncle would be a terrific source.

10% is the new norm for some hard money lenders but conventional finaning is now 20%. 90% loans are not possible with conventional because PMI companies wont cover. If you're willing to buy a Fannie Mae reo there are lenders that can fund 90% with no pmi and a bit higher rate. But you first need to see how these properties are priced and if they would cash flow or create equity in 1 years time.

If you were planning using hml as a way to get into a porperty with less money out of your pocket then it's still a good option. There are some that dont require down payments. Or you could always try to get seller financing.

HML can still be used for shor term, then refinance into a conventional loan. Works only if you are buying at around 65% ltv so that you could refi at 70%.

Consider this too. If you're dealing with smaller loans like $50-$100k, the fees for hml just very well be close to what a traditional mortgage may cost you.