All Forum Posts by: Stacy Raskin

@Alfred Litton, 

1. Yes, 75% LTV is possible depending on the lender. Some lenders are tightening up their lender standards now. I work with lenders who do 75% cash out depending on credit score. Generally 700+ credit scores will get you best cash out options with the lenders I work with.

2. Some lenders will use your cash out proceeds as reserves so no reserves are needed for DSCR loans.

3. Rates and points depend largely on LTV, credit score and whether you're cash flowing. More on that below.

4. Loans are closing anywhere from 2.5-4 weeks depending on how quickly the appraisal comes back and who you are working with. Generally banks move more slowly than brokers as they have more red tape to contend with. They are also more conservative with the underwriting and credit standards and you will hear "no" more often from them. 
.
Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Are you cash flowing the property? Is your DSCR ratio greater than 1-meaning are you cash flowing. Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350

Insurance = $100

Association Dues = $50

Total PITIA = $2200

Rent = $2000

DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250Insurance = $100

Association Dues = $25

Total PITIA = $1875

Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

Lender terms and fees vary widely. As a mortgage broker, I shop my clients' loan to get them the best possible loan and the least fees while helping them to reach their investment goals. I'll send you a message as well.

@Kenneth Bentley, what is the mortgage balance and what would you estimate the value of the rental property to be? These are major factors that lenders will consider as to whether they can do the loan besides your credit score. 

@Taylor Wisnewski, yes based on your situation, I think DSCR loans would be the best way to go. Most DSCR lenders have a minimum loan balance of $100-150K.

Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Are you cash flowing the property? Is your DSCR ratio greater than 1-meaning are you cash flowing. Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350

Insurance = $100

Association Dues = $50

Total PITIA = $2200

Rent = $2000

DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250Insurance = $100

Association Dues = $25

Total PITIA = $1875

Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

Lender terms and fees vary widely. As a mortgage broker, I shop my clients' loan to get them the best possible loan and the least fees while helping them to reach their investment goals. 

@Juan David Maldonado, do you currently own your own home or what kind of markets are you looking to buy in? 

@Benjamin L., I'm a mortgage broker that works with multiple HELOC lenders. I'll send you a message as well.

Where are your properties located?

I've worked in the leasing field and I never knew until then how much people hate carpet. It makes it more difficult to rent. 

I work with lenders that do 20% down if the property is cash flowing or looks to cash flow with market rents. If vacant, some will take that into consideration. The pricing on the rate will be higher than 25% down but it's doable depending on the potential property. Better pricing usually starts at about 1.2 so the rents are covering 120% of the expenses. 

Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Are you cash flowing the property? Is your DSCR ratio greater than 1-meaning are you cash flowing. Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350

Insurance = $100

Association Dues = $50

Total PITIA = $2200

Rent = $2000

DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250

Insurance = $100

Association Dues = $25

Total PITIA = $1875

Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

Lender terms and fees vary widely. As a mortgage broker, I shop my clients' loan to get them the best possible loan and the least fees while helping them to reach their investment goals. 

Now is the time for savvy investors to buy. When rates drop, we will be back to the days of 15 offers (this actually happened to me last year). Now is the time to buy when you can get seller concessions (depending on the market) for buydowns, closing costs, etc. That way when rates do drop, you will have the property and will be able to just get a lower rate versus being one of the 15 people fighting over the same property. 

I have a friend who all he ever talks about is how his pool costs him money and he wants to fill it with dirt : )