All Forum Posts by: Jay Hurst

Yes, I have experience with these loans. The appraiser will do a "subject to" appraisal based on the specs and plans of the renovation. In other words, the value will be based on the after repair value. The lender would then hold the renovation funds and pay out the funds to the GC as draws. So, the down payment is the 20% of that ARV.

This loan would not be eligible for a FHA 203k unless you plan on living in the property as FHA is for owner occupied properties only. If you want to go conventional, from the sound of the condition you would have to use the Fannie Mae Homestyle loan. This is FNMA's renovation product. This product will lend up to 80% if the after repair value of an non owner occupied (95% of an owner occupied property).

There are options with both a 5/1 ARM with 30 year amortization and 30 year fixed to take cash out of a non owner occupied duplex. I am Dallas not San Antonio but that does not matter at all. The rate would be quite a but higher then the 70% loan to value conventional loan but it can be done.

I cannot speak for all private lender's but we do not have a pre-payment penalty. We actually start the process of the conventional refinance right away so the borrower does not have to pay the higher rate private rate we are charging for any longer then they have to. We tend to get our loan paid off with a conventional loan within 30-45 day.  

For Fannie/Freddie backed conventional loan it is absolutely 6 months. No exceptions unless you paid all cash for the property. For a lender that portfolio's their loans (does not sell them to Fannie/Freddie), they can make their own guidelines on this issue. Most still have at least 6 months seasoning but there are some programs that would not require that level of seasoning.

Because the title is vested in an LLC, for a conventional loan you would need to put it in your personal name for 6 months before either Fannie or Freddie would allow you to pull cash out. That would be the same no matter who the lender is.

So, that would leave portfolio as the only option. We have programs that are ok with an LLC, and can usually get around the seasoning issue. However, we do not lend in Ohio.

 It is still a bit grey and undefined as it pretty new. But, if you can prove that the business was opened through documentation filed with the state etc you should be ok. Of course, you still have to get one year findings which requires an other wise very clean file.

But, again, even if that approach does not work we do have some portfolio programs available that might be able to get you into the house which you could refinance once you have your 2 years of solid tax returns.

Most lenders can choose to either run DU (Fannie Mae) or LP (Freddie Mac) with very slight pricing differences. However, Freddie recently changed their guideline to now require 2 years of tax returns unless the business you are deriving the self employment income has been in existence at least five years. So, unless your business has been around five years you would still need to provide two years of filed tax returns that would averaged. You can see the change starting at the bottom of page two on the link below:

That being said, there are portfolio products that might work for you as a sort of bridge until you are able to qualify for a conventional product depending on the rest of your file.