All Forum Posts by: Ryan R.

Most lenders will want a credit pull, income info and have a property address to generate a LE (Loan Estimate) due to the fact that for a 30 period they must remain within a 10% tolerance of this quote for all fees quoted or else they will have to eat those fees, unless there is a valid change of circumstances, in theory they need to have an accurate FICO, DTI and good ballpark value to determine the LTV for pricing purposes on the quote.

Most lenders will provide a "Fee Worksheet" that doesn't have the same requirements as an LE, this should provide you with fairly accurate fees that can be compared. For comparison purposes, do not pay too close attention to the pre-paid items or the escrow portion of the fees as in the end they will all be the same, just figure out who has the lowest Lender/Title fees and then once you narrow it down, have the LO's explain the escrow portion, I say this, because a newer less experienced LO will "just let the computer figure it all out and a lot of times on the estimate they will just use generic figures like 6 month taxes and 6 months insurance, however, this is not going to be accurate, these should be based on when the next due date is and a reasonable pad (2-3 months is standard for this pad). For example, if you close your refi in Aug, as your insurance is paid in July, then you should only have between 2-4 months of insurance escrowed, remember you only make 10 payments the first year of a mortgage and is the reason for the 2-3 months pad, one month for the difference of when due and loan closed and 2-3 months for the pad depending on the lender requirements, same basics for calculating taxes. This is where you can start separating the good LO's from the mediocre ones, if they can't explain or calculate in a manner that is easy to understand then they will more than likely have trouble during the refi experience as well and you are probably going to have a headache during the time it takes to close the refi.  

You will most likely never receive a CD "Closing Disclosure" until you have an approval issued because this is a disclosure of the final fees to be charged and also has a small variance that has to be adhered to allowing for only small variances like messenger fees or additional recording costs not anticipated. 

As mentioned, you will find it difficult to do an equity HELOC on a property listed for sale, however, some lenders do offer "Bridge loans" they can be a little difficult to find these days, but, some Banks and Mortgage companies still offer them, it is a loan against the listed home to finance the down payment on the new home purchase. Otherwise like Chris mentioned look at doing the 1st for just a bit more than what you were planning to finance if you had already sold your existing home (do it for a bit more than expected for any unforeseen shortage when you sell, like seller paid borrower concessions, repairs you didn't expect, ect) then get a 2nd mortgage to finance the difference to avoid the PMI and pay off the 2nd when home sells, might want to consider a HELOC on the new property so that once paid off, you still have access to the funds if ever needed and while not needed you don't pay any interest.

Until paid, the loan will be an FHA loan, even after removal of the Monthly MIP. Having another FHA loan will require an extenuating circumstance, like job relo, move more than 50 or 100 mile radius (can't remember the exact range), ect.

There are 10% down options for owner occupied duplex's, shouldn't be too hard to find. 

If you are trying to use the "Delayed Financing" exception a couple of things you should keep in mind, #1 you must have paid all cash for the property (no borrowed funds for purchase) and no liens on the property #2 you can use the maximum LTV allowed for purchase of property (ie. for an owner occupied property 97/95% LTV or non-owner occupied max is usually 80-85% LTV) #3 must refi within 6 months of purchasing the property (so for the most part you are going to use the purchase price plus improvements rather than the new appraised value) #4 property will have to qualify condition wise within the lenders guidelines, so no major work should be outstanding like broken windows, holes in the roof, ect.

You should not have the 'friend' record a deed on the property, have a contract between the two of you for business purposes and purchase the property jointly and pay back based on the contract/agreement you have with them.

There are other types of loans like Hard Money & Non-QM programs that may have different guidelines that can help you as well, but, the Delayed Financing option will give you the best long term rates for a longer term hold with fast repayment of most of your capital.  

Most conventional financing will require the "Lessor of the appraised value or the purchase price" during the first year, so, document the improvements you have made and that can help with the purchase price issue somewhat. There is the "delayed financing" option but the issue you will run into is that if you did not season the funds from the personal loan into your account for at least 2 months, the loan will preclude you from the exception and you more than likely will need to wait for the full 12 months to season the ownership to be able to use existing value rather than purchase price. 

Your other option is some of the Alternative Non-QM lending programs that are out there, there are several that take the Rent Debt Coverage Ratio to determine the income or debt ratio instead of the borrowers personal income, most of these only have a 6 month ownership seasoning to use existing value, one company that has this program is Impac Mortgage, they have their credit matrix online to view at "http://impacmortgage.com/media/forms/iQM-Investor-... they require a low 1.0 debt coverage ratio so as long as your rents cover PITIA expenses then your good to go, cash out is required to be used for "business purposes" only their retail division is Cash Call mortgage, FICO can be as low as 600 and cash out LTV's from 65-75% based on credit, I used to work for IMPAC as they were rolling out the product, it is pretty competitive in the market for this type of financing.

Good luck.  

For a 2-4 unit property you will need a minimum of 25% down for (most) conventional financing (20% for SFR's) this will have to be sourced and seasoned for 60 days, your max CLTV (Combined Loan To Value) will be 75%.

What does this mean? 

Source and Seasoning the Down Payment: Conventional lenders (for the most part) will require that you verify, that, for AT LEAST 60 days, you have had: either the funds in your account OR you have earned (maybe a bonus at work, business profits, ect) or are entitled to funds (retirement savings account, inheritance, award prizes, proceeds from the sale of an assett, ect) and can prove where you obtained those funds from to show they are not a new debt or ineligible funds (funds that can't be sources or borrower funds).

As to the LTV/CLTV: you will not be able to have the agreement between you and your fathers friend recorded against the property at time of closing, because of the CLTV restrictions, you can borrower 60% from conventional financing and get a 15% 2nd mortgage from your fathers friend, but, this would not normally make sense to do since the 1st mortgage is willing to go to 75% anyway. The restriction requires that you as the buyer has "skin in the game" to ensure that the 1st lien holder is not the only one at risk. In theory you could record the agreement after the fact, but, you do increase your risk of the lender calling foul and possibly being accused of fraud (not saying you would be convicted or charged, but it is possible), depending on how soon after the closing you record the agreement and when the agreement was dated, ect....

Always good to have the agreement in writing and witnessed/notarized is a good idea, recorded against the property is much safer for the lending party, but may make the financing of your intended property a bit more difficult if they expect to have this done through the closing of the loan and you are using a conventional lender. I can't tell you how to structure the deal so you can defraud the lender you will be using (I don't wish to put any licensing at risk), but, I'm sure there is a way to accomplish your goals if you were to structure this correctly, now, that you know what the problems are, that you are going to face.

When it comes to conventional financing (I'm referring to FNMA/FreddieMac, some institutions that retain the loan many have different rules) a few things you will run into, you can have as many financed properties and be able to refi your primary residence, but, when it comes to refinancing investment properties, if you have more than 10 financed properties, FNMA/Freddie will not purchase the loan and therefore you will be turned down, if you have fewer than 10 financed properties, some lenders may limit their exposure and limit the number of properties they will refinance for you and you may have to do some loans with one lender and some with another.

There are some lenders lenders that will refinance your property even if you have over 10 financed properties, the only downside is that these loans will typically be at a higher rate than the conventional financing. 

Also with conventional financing, the lender will determine the value during the first year of ownership under most circumstances as the lower of the purchase price or the appraised value, whichever is LOWER when it comes to cash out loans, they do have a delayed financing rule if you paid cash for the house and want to pull it out during the first 6 months but you will still only get to 75% LTV for an investment property based on purchase price.