All Forum Posts by: Kevin Romines

As mentioned above, you can get a par rate at no discount points, but you can also get above par and get the lender to credit you to cover closing costs. You can also get below par or a bought down rate that will charge discount points. 

That said, it is not always best to go a specific route, it mostly depends on your specific circumstances. How long do you plan to be in that loan before either refinancing or selling. Depending on that specific answer, it will lead to the correct path that should be chosen, whether that is buying down the rate, getting the par rate, or getting an about par rate to get the lender credit for closing costs. Its not real complicated, its purely a math question. The hard part is looking forward to the future to predict your actions and when they may occur. 

Now, on to the differences between a nationally charter bank, a banker, and a broker. There are advantages and disadvantages to all 3 for you the borrower. A bank has its own loan products and may have some other products they broker out or sell on a correspondent line. They typically underwrite most of what they sell and they service most of what they sell. All good stuff, except their offerings are much more limited than a Banker and a Broker. 

A Banker is considered a non-depository banker, meaning they offer mortgage loans but no depository services. They will have some of their own internal products that they underwrite. They will have some correspondent line type products that they will underwrite or have the lender they sell to underwrite the loans. They may even have some loans they broker, but typically bankers don't broker much. Their compensation is hidden as they build their compensation in to the rate, so they are typically not as competitive as a broker on interest rates, who has to disclose all compensation. Same things with the banks, they do not have to disclose all compensation on a loan as they have their compensation built into the pricing (interest rate). 

A broker must disclose all compensation to the borrower. Because of that reason, they tend to be the most competitive with the rates as nothing undisclosed to the borrower will ever go to their compensation. Brokers also tend to have a much deeper product line up as they are offering the loan programs of many lenders, so they shop for the best terms and rates for their borrowers. 

That said, on any given day, any of the three types of lenders can compete well on interest rates and fees if they choose to. However there tends to one channel that competes more often and more aggressively on rates and fees and that is the broker channel. 

I hope this give you a better insight as to how the industry works. 

So it depends, are you going to keep this as a rental or now make it owner occupied. Your not supposed to make it owner occupied during the term on the hard money loan, but nothing prevents you from doing so now that you are doing the refinance. 

That said, the max. no cash out LTV's on owner occupied are 97.75% on FHA and 95% on conventional loans. If you are keeping it as a rental, you can go to 75% LTV on conventional or 70% cash out. On a Non-QM loan such as a bank statement or a DSCR loan, you can go to 80% cash out and in some cases 85% no cash out depending on the lender and the number of units.

So it depends on a few factors. 

I hope this helps. 

FHA doesn't require tax returns if you are a W2 Wage earner. Regarding the 2 years employment, FHA just requires 2 year of history of any employment, but will take your current wages at face value if you work at least 40 hours per week. If you work less than that, they will average your income.

The down payment on FHA is 3.5% on 1-4 units, so meeting your requirements for down payment. Don't forget that you can negotiate that the seller pays your closing costs, thereby keeping your cash to close at the 3.5% of the purchase price.

If you are self employed, FHA can still work with a 12 month average, and Fannie Mae and Freddie Mac will also allow a 12 month average in certain cases.

Get with a lender that knows these guidelines and you should be good from there. 

I hope this helps? 

This would be a land development loan. You can get 50% to 65% LTV on raw unimproved land, or if there are horizontal improvements, you can get 75% LTV to finish out the horizontals.

The construction loans will give you 85% to 90% of the LTC or loan to cost, but these will only be done on an individual basis. each lot on its own loan. 

Let me know if you have any other questions, I'm happy to help.   

Here are your options in order of what will give you the best terms. 

1) Fannie Mae cash out refinance to 75% on a single family residence or 70% on 2-4 units. Fannie Mae allows a borrower to transfer title to the property to an LLC that they are the majority members of after closing without it violating the due on sale clause. They changed that rule to allow this on 6/1/2016. This will give you the best interest rates. You will have to do the loan and title in your personal name and then switch it to the LLC after closing. So if the title is currently in the LLC, you will need to rerecord it in to your personal name to do the loan.

2) A Non-QM loan such as a bank statement loan or a DSCR loan. The bank statement loan will give you rates about .5% better than DSCR but you must be self employed to do that loan. Or do a DSCR loan typically up to 80% LTV but higher rates than a Fannie Mae loan.

I hope this helps?

Removing a borrower that is on a loan from title, but leaving the other borrower on title, is not a violation of the due on sale clause. A due on sale clause is not law, it is a provision in a contract, the contract between you the borrowers and the lender. There is no sale in this case. 

You can look to see if the loan allows you to assume it. If it does, you can apply to assume the loan on your own credit, income and debt ratio. If that works out, then she will just not be on the new loan and title, only you will be. But if the loan doesn't allow an assumption, then use the correct mechanism for Texas to remove her from title. This means she no long has an ownership interest in the property, despite the fact that she will remain on the loan until it gets refinanced or paid off in some way. 

What are your goals, to remove her and have her relieved of the debt, if so that requires either an assumption or a refinance. If you just want her removed from ownership, but not the loan responsibility, you  can just remove her from title via whatever mechanism Texas allows. 

If she were to still be on the loan after you have done whatever you do, typically she wont have the debt counted against her debt ratio on a new mortgage after you have been paying the mortgage from you account for 12 months or more. It will still count in her debt ratio on a consumer loan, but not on a mortgage with the new lender. She would just need you to prove that you pay the mortgage from you account for 12 months or more.

I hope this helps?

Hard money offerings are generally in a range of terms. My flippers, require different things depending on the deal. 

The lenders offer between 75% to 100% acquisition and almost always 100% rehab. The fees range from 2-3 points with some type of admin fee in the $1000 - $3000 range. The interest rates range from 9.75% to 12.5% depending on experience and down payment. There are lenders that require a full appraisal through an AMC and others that will determine value themselves, so closing turn time ranges from 7-21 days. Some lenders charge interest on the full amount of the loan, but most only charge interest on the amount drawn.

Most terms are 12-24 months on the loans. You can typically get extensions of 3-6 months for around 1 point, but there are some differences there lender to lender. ARV ranges from 65% to 75% depending on the program. Docs required are dependent on the LTV in most cases, as the LTV goes higher, the more docs they want, such as income, bank statements, and credit. Reserves range from No Reserves, to 3-6 months. Minimum loan amounts range from $50,000 on up to $100,000 in most cases.

Heavy rehabs or rehabs that are bigger than the purchase cost range from not allowed to case by case to no issues, so all over the board on that issue. Minimum credit score ranges from no credit needed to 620 to 660 depending. Lenders that work with wholesalers, meaning they will allow their assignment fee or do a double close, most allow it, but some don't? Lenders are all over the board regarding what LLC members must sign on the loan. Most lenders allow the buyers to do their own rehab work, but some don't depending on the buyers experience level.

I know I just laid out a lot of details there, but my flippers need to know all these things, so I keep a spreadsheet of who is doing what, so I can place the loan with the correct lender depending on details needed with my flippers. 

I hope this helps?

There are really 3 options, assuming you are self employed. Only 2 options if you are a W2 wager earner. 

1. Full doc Conventional loan will generally get you the best rates and terms.

2. Bank Statement loan if you are self employed. 12 or 24 months personal or business bank statements. This gives you closer to conventional rates, but this loan has a pre-payment penalty within the first 1-5 years, you choose the length or penalty. 

3. DSCR loan. No employment or income is put on the application, it just considers the rents/lease amount versus the PITI mortgage payment on the loan. The rents/lease needs to equal to or more than the PITI mortgage payment. This has the highest rate of the 3 loan types, and it will also have a pre-payment penalty for 1-5 years.

I hope this helps?

Start with your sphere of influence. Make a list of 200 people you know on any type of level. These are the people you will be reaching out to let them know you are in the industry and can help them with their mortgages. You need to learn the basic loan program details, so when asked, you can have a conversation and hold up your end of it. 

You need to decide the type of loan you want to focus on and then build a marketing plan to be able to go after those borrowers. To hit the ground running, you will need referral partners. Decide what and who those partners are and build a marketing plan to gain those relationships. 

That should keep you busy for a while. Best of luck, and know this......Money is made in conversations. the more conversations you can have with anyone, the more money you will make. 

You have a few options. In all cases you can use the HELOC as your down payment.

You can buy it as a 2nd home so long as you can qualify for the full mortgage payment with as little as 10% down, however because your HELOC has so much available, I would consider 20% down to avoid mortgage insurance. This will give you close to owner occupied rates. You must agree to live in the property 14 days out of the 1st year. After that do as you wish. You can not count rental income as this is considered a vacation or 2nd home.

You can buy it as a rental on a conventional loan at 15% down, again I would consider putting 20% down to avoid MI. 

You can buy it as a DSCR with 20% down, no income or employment will be on the application and only the lease versus the PITI mortgage payment will be considered. You want the rents to be equal or more than the PITI mortgage payment. meaning a 1:1 ratio or higher.

I hope this helps.