Here another scenario: I have a VA loan eligibility, and could conceivably purchase the largest rental property at 100% of appraised value for my own personal residence (I know I have to move into it, and that would be fine.) At that point, the front two houses would have a 50% LTV, even at 10% below Zillow estimates. Could I get "conventional" rates on those two rentals then?
It was my understanding, based on preliminary discussions with a commercial broker, that the best I could do with a commercial loan was 6.5%, and only 20 year amortization, which wouldn help me. I really need to get to about 5%, maybe 5.25% (the lower the better), in order for things to improve.
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think that I could get "conventional" rates (=5.25% for 30 years), even though this is investment property?
Jon Holdman, Flying Phoenix LLC
Jon Holdman, Flying Phoenix LLC
The properties in question are three single family rental homes. Current LTV is about 80%, but maybe as low as 55%, depending on how the property is appraised; (NCDOT just bought some right of way from me for a per acre price that would put my LTV at about 55%.
The appraisals came back around 81% LTV, Air Max Tavas Finish Line which ruled out most of the local banks (they were all looking for 75% LTV or better.) I found a mortgage banker who was able to get this deal done by doing owner occupied (95% LTV) on one of the three houses, which lowered the two other houses to 75% LTV.
I willing to "play by those rules" because I do need those terms. In your estimation, is it reasonable to Yellow Air Max Thea
I was never able to find a way around the six month ownership seasoning, so I just had to wait. (It a good thing I did wait the rates have continued to drop.)
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Can anyone provide any insight on this 6 month "ownership seasoning" requirement, and maybe give me some suggestions on how I can avoid it? Is it a federal requirement, or is it just a "good business practice" that bankers adhere to? I really, really like to take advantage of these rates, and I like to start saving money NOW instead of 6 months from now. What are the odds?)
Deffinetly talk to community banks they have access to the same lenders but are often just easier to work with. Just pick up the phone book and call banks to see what they can do. Unfortunately more than half will lie to you an tell you they can get the deal done but after paying for the appraisal and other fees you may learn that they can That is the going rate for commercial if you shop around you mat find 25 year am. Where are you located? We work with some lenders that are nationwide. I may be able to send you to the right place. Like usual your income and credit will have to be in align with traditional lenders.
Those terms look like portfolio loan terms. Sounds like you looking for conventional loan terms, and even then getting to 5% on an investment property is a stretch. OO rates are lower than that, but investors always pay higher rates.
I purchased a few rental houses about six years ago, and want to refinance them to take advantage of these low rates. The deeds are in the name of my LLC now, but if I re deed the properties in my personal name, I can get a good rate on the mortgages (that what the broker is telling me.)
Jon, thanks a lot for the insight. I really appreciate it. You wrote: If you want the lower rates and longer terms offered on conventional loans, you have to play by the conventional rules.
Avoiding ownership seasoning on a refinance
I not priced a loan in a couple of months, so I not sure exactly where rates are. If you see ads for 30 year fixed mortgages, assume those are for OO borrower with stellar credit and low DTIs. If you have plenty of cash in the bank for reserves, 750+ credit, and enough income to keep your DTI low (don know how low, maybe under 40 45%?), you will end up with four or fewer mortgaged properties, and you refinancing at 70% or lower LTVs you should be able to get about a point higher than those advertised rates. Miss on any of those criteria and you rate is going to be higher.
Which brings up a new question: If I do this deal and get owner occupied financing on one of the houses, what happens if I don move into that house? How can they find out that I haven moved into it, and if they do, would they call the loan?
Bryan, thanks again for the comments, and I will let you know how it goes.
the problem: I being told I have to wait 6 months after re deeding before I can refinance. They calling it an "ownership seasoning" period.
You best bet is to start speaking with lenders and mortgage brokers in your area. We don know enough about your personal situation to speculate.
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Sorry to be such a leech, but I just don have any other resources to help me with this.
Bryan Balk, I inclined to agree with your comments about "this kind of stuff is done all the time". I just don know where to look, which is why I here. Should I talk to community banks? Who in the banks should I try to get in touch with?
You also need to take a hard look at values. Extrapolating from a DOT purchase sounds like you just taking per acre and multiplying for the whole size. Zillow is likely to be high. Fannie guidelines limit you to 75% LTV, assuming you own four or fewer mortgaged properties. You need to get an agent to pull some comps and find out where you really stand before you start paying for appraisals and get a ugly surprise. Assume an appraiser is going to use the lower end of the comps, not the better ones. The trick with appraisals these days is to avoid the appraiser using a short sale and two REOs for comps.
Thanks for all of the responses.
Unfortunately, the six month time limit you bumping into is a Fannie Mae guideline. By definition, Fannie (and Freddie rules are what make the loan "conventional". If you use a portfolio lender, you should be able to avoid those rules, but you pay a higher rate and have a shorter term. If you want the lower rates and longer terms offered on conventional loans, you have to play by the conventional rules.
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