All Forum Posts by: Patrick Roberts

You will need to find a lender like @Jay Hurst or a local bank/credit union who will hold the line on balance sheet. Another option is a DSCR 2nd lien. These are becoming more popular in the secondary market and quite a few major wholesale investors offer them now. These will be cashout refi type products and not revolvers, but they will allow you to keep your existing first lien in place.

On Conventional conforming loans and Govvy loans, there are established LLPA tables that show exactly what the pricing difference will be at each tier. DSCR loan LLPAs are all unique to the rate sheets of the source of the money - they will likely have similar LLPAs, but they will not all be the same or match other loan types.

That being said, some lenders will tinker with the LLPAs with thier own pricing adjustments to target certain ranges to compete within. It's not perfectly linear or harmonized across all lenders and loans products.  

The market is saturated with originators relative to the number of deals at the moment. Historically, comp for originators who are self-sourcing business is 100-175 bps and paid by the lender. Also, these roles are typically commission only with no base pay or salary. 

The saturation is leading to a race to the bottom, where some originators are willing to work for a half-point or less. This is especially true right now as there are so many "brokers" who are effectively just BDR's and not originators. There isnt as much value in someone's services who is just a connector and doc-chaser, compared to someone who provides insight, guidance, experience, and negotiating power. This is kinda like the whole paradigm of tax preparer vs CPA/EA - one will be an order taker and will just trade time for money to fill in the blanks on forms, the other will provide years' worth of expertise and knowledge condensed into tangible guidance that can save a multiple of their cost.

This also depends heavily on the loan type. Hard money/private loans are considerably less work and labor-intensive than an FHA or VA loan, as well as close much more quickly, so I can see there being a differential in comp between those.

 Nope. If you put down 10% or more, then monthly MI can be cancelled after 11 years. If you put down less than 10%, then it's permanent. That being said, in 98% of cases, if you're putting down 10% with a 700+ FICO, you're better off with a Conventional loan regardless, so kinda a moot point. 

Yeah, because all of the temporary buydowns over the past 2-3 years have worked out so well "since rates are coming down next year." Been hearing that since 2022. "Marry the house, date the rate" lol.

If you get another FHA loan, you will have to pay UFMIP again. This is 1.75% of the loan amount. You will get a partial refund on the current UFMIP that you are going pay at the current closing, but it will not be a full refund. I seriously doubt the lender credit will cover this delta in UFMIP and also the lender fees. It also wouldnt surprise me if the "lender credit" you will get is the partial refund of the UFMIP. I have seen unethical lenders do this - they call the UFMIP refund a "lender credit" and then gloss over the fact that youre paying UFMIP all over again because it's being added to your loan balance rather than paid for at closing.

Also, monthly mortgage insurance (MI) on FHA loans is permanent unless you put down 10%+, so you will eventually be looking at a third refi at some point to get rid of the monthly MI, which is 0.55%. For simplicity, just add 0.55% to your note rate to grasp the full impact.

If this was my loan, I would ask the lender to apply the credit for the temp buydown toward a permanent buydown instead, then would use whatever you anticipate spending in the next 6 months on a future refi to buy the rate down even more, and let that ride for a while until you build equity in the property and increase your credit score. This would likely get you well below the current 6.125% youre being quoted on the fully-indexed rate, and would eliminate the need to pay for another loan/closing within a few months. It would also hedge your risk that rates do not drop meaningfully, which is just as likely as rates coming down.

Using your logic that rates are certain to drop enough to justify a refi within the next year, you should be taking a higher, above-market rate in return for a lender credit, rather than paying extra (through the opportunity cost of the lender paid temp buydown) for a lower rate. To be clear, I do not recommend doing this, but that would be the logical move if you believe you will refi in 6-12 months. Get a lender credit to cover all or most of your closing costs now, and then when rates drop, pay for a refi to get the final, lower rate. The risk in this is that rates dont drop and youre stuck with the higher rate for the foreseeable future. 

Do you currently live in this property? If so, there is 0 reason to use a DSCR in this scenario. For one, you cannot use DSCR loans on a property that you occupy, and on top of that, a DSCR loan will almost always be more expensive than a comparable Conventional loan, especially if the Conv loan is a primary residence loan and not an investment property loan. If you do not live in the property, then a primary residence loan is off the table as it's an investment property and not a primary residence.

I would refi now since you have to the opportunity to both lower your rate significantly as well as extract cash from the equity. From a quick glance, you could probably cashout $100k and still pay the same or less than you pay now with the decrease in the rate. 

As far as the Heloc goes, the question is really about how frequently the money would be in use. If you think the cash you could pull out would constantly be in use/deployed, then the cashout refi makes more sense. If you will only use the cash periodically and for short periods, I would lean towards the Heloc. Another consideration is that Heloc lines can be converted, frozen, or cancelled, whereas a cashout refi is permanent. 

There is 0 reason to spread extra principal payments across all of your properties equally. You should not be prepaying any principal at all on the low rate loans. Each dollar of prepaid principal should have a strategic reason behind it, such as getting a particular loan/property down to a certain LTV for a future refi or a recast. Outside of that, pay any extra principal toward the loan with the highest rate.

I'm not a fan of owning investment RE without using debt. Leverage is the primary tool that makes RE an excellent asset class. 

I would personally apply any extra principal to the loan with the highest rate. Up to you, though. 

I dont think you will have an issue here. As far as Im aware, the UW will check that the first month's rent and the security deposit have been deposited/received to allow the use of rental income. I dont remember the guidelines requiring any continuity on the security deposit. 

Worst case scenario, I expect that an LOE would suffice. 

Make sure you're familiar with property taxes in SC. The tax rate for investment properties or non-owner occupied are much higher than the rates on legal residences. That being said, Columbia and West Columbia are still relatively decent markets for rentals.