All Forum Posts by: Jon Mason

@Andrew Postell thanks Andrew, FHS class of 2000 here.

I’ll have to chew on that answer for a while. It makes sense for the most part, but it’s a lot to digest. If I’m reading it correctly, you’re essentially saying if I record the family loan as a lien and get it paid off through the refi at closing vs a cash out then I’ll get better terms. Tell me if I got that wrong.

Perfect! Thanks all!

@Steve Frye - I'd be interested in the name of your lender as well!

I have a potentially stupid question, but here goes. We purchased a property as a rental for $120K. $85K is a conventional mortgage and the other $35K is a loan from a family member. We're almost done rehabbing the property and I believe the ARV will be somewhere from $150K - $160K. I want to refinance and pay off my family member as soon as possible after we get the house rented. I know you can only refinance for 75% - 80% LTV in most cases. My question is whether that LTV is calculated including ALL the loans used to buy the property. So does it include the loan from my family member, or is it just the mortgage itself? The loan from my family member isn't secured by the property or anything, it's just a personal loan. This would mean the difference between being able to refi and pay my family member back in full or nearly in full, or having to hold the loan and pay it off over time.

@Andrew Postell Wow! Small world! I graduated from FHS in 2000. I grew up in Cottonwood. One of the few natives around here these days.

Thanks for much for the info!  I'm guessing with all the requirements around a conventional mortgage, and the condition of the house, we might need to do a portfolio loan, and then refi into a conventional mortage down the road. That's excellent advice about pre-qualifying. It wasn't really on my radar.

We just got a SFH under contract. We will be putting 20% down. We need to secure financing, and have talked to several lenders with varying options from ARMs to conventional mortgages. we've purchased several homes as primary residences, but this is our first investment property and I want to make sure we're not screwing up here.

One loan we got a quote on was a 10 year balloon, 5 year fixed, with an adjustment after 5 years and then locked in again until year 10. It was amortized over 25 years. It was an "investor purchase" loan and I don't think it required an appraisal. Is this the same as a "portfolio" loan? I'm intrigued by this option, but also the word "balloon" gives me heartburn, although I know from reading on here that it can be a valuable tool. We had thought of using this option for a BRRR, but I don't know that it's a good enough deal to be able to refi in less than a year into a conventional mortgage. We might need to hold it a few years before refinancing and with rates on the rise, I worry that we'd get locked into a loan with a higher rate.

Had another bank quote us on an investor type loan at 5.25% over 20 years with a 5 year lock. Not sure if that's a good rate or not if we went that direction.

My father in law has encouraged us to go ahead and lock into a conventional mortgage, but my concern there is the appraisal, as the house in its current condition may not appraise for the sale price. I also don't know what other restrictions we might run into around a conventional mortgage on a second home.

I appreciate you're advice!

@Mike McCarthy  was that through a local lender or credit union? Anyone out there have any good lenders they can recommend in the Nashville or Franklin Tennessee area?

My wife and I are researching using a portion of the equity we have in our house to purchase a SFR. I spoke with a commercial lender yesterday who quoted me on a HELOC and I'm questioning some of the terms and whether or not this is a good deal.

They'll go 90% LTV at prime + 1. It's a 10 year draw period, no closing costs, only the 3rd party fees (appraisal, etc) which he said would probably be around $850. The lifetime max rate is 24.33% with no annual cap which makes me a little nervous from a catastrophic worst case scenario perspective. However, my hope would be that we'd refinance into a traditional mortgage and pay back the heloc after it's seasoned.

My (probably newbie) question is. He quoted me prime + 1 on the phone, but when I got the document reflecting the terms, in one place it states, "To determine the APR that will apply to your account, we add a margin to the value of the index." which seems to correspond to the prime+1 bit, but then in another spot where it talks about rate changes it says, " there is no limit to the amount by which the rate can change in any one year period, except that in no circumstances will the rate ever be less than 7.097%." What am I missing here? I know that an interest rate and an APR aren't exactly the same thing, so maybe that's what's going on here, but I'm hoping someone can offer some guidance.

Also, I plan to shop around a bit, but does this sound like a good deal, and if not, I'd love some recommendations for other lenders who could also do more of an investment type loan in conjunction with the HELOC.