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Homeloanwisdom

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Reply with quote  #31 
I can't get you over the 10 but if 10 or under properties in California I can finance. There are some restrictions (qualifications) as noted above and below as it pertains to financial  reserves, credit and qualifying. Qualifications get more restrictive the more properties you own but it worth looking at and positioning yourself in advance of applying for a loan since the savings are significantly lower than private or hard money.  

Today's Rate as of 10/27/2017 (subject to change) on single unit investment property at 75% LTV with a FICO of 740: 4.875% at "no points"

I just posted this elsewhere on similar  thread on the message board but it is worth the duplication (to me and hopefully you).

Do you want to finance up 10 properties in California?

 

You will of course want the best rate possible which are loans at bank quality rates.  The rules pertaining to 10 financed properties are set by Fannie Mae & Freddie Mac rules which nearly all bankers and institutional lenders abide by.  

 

Exclusions to the 10 financed properties are:

  • Multifamily of 5 units of greater
  • Commercial
  • Vacant land
  • Exclude primary residence if it is the subject property for loan (refi or purchase)
  • Exclusion if subject property is already owned by Fannie or Freddie prior to 4/2010 (I need to double check date if this comes up) as this is the date for HARP

 

What are the hang-ups and why does it get more difficult for each additional property you own?

Primarily it is the financial reserves that are required for each additional property, the loan-to-values get less and credit requirement (FICO Score) gets higher.

 

Reserves:

Subject property X 6months PITI

Plus

2% of aggregate of unpaid balances of if borrower has 1 to 4 financed properties

Or

4% of aggregate of unpaid balances of if borrower has 5 to 6 financed properties

Or

6% of aggregate of unpaid balances of if borrower has 7 to 10 financed properties

+++ exclude primary residence from above

 

Example if you own 8 financed properties:

NEW Subject PITI is $2000/month x 6 months =                                                                                $12,000

Other properties unpaid balance are $1,500,000 (exclude primary residence) x 6% =              $90,000

 

Thus if you would need $150,000 in above example (I can use % of 401K & IRAs in lieu of cask reserves)

 

FICO Scores

680+ for up to 6 financed properties

720 + for 7 to 10 financed properties

 

Loan-to-Values (rate/term & Cash-Out)

65% to 75% depending on type of property

 

If the property you desire to finance is in California give a call or send me an email. I’d love to talk to you.  No cost or obligation, we can go through the numbers and qualifying issues to see if we can you a bank quality(best terms) loan.

 

 


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Thom MacFarlane
Banker-Broker NMLS #282091
thom@sibloans.com 858-485-0462
@theloanhelpdesk



Jeff

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Reply with quote  #32 

I will NEVER understand this logic.  WHY is a borrower with 11 cash flowing properties, with an average LTV of 70%, with an equity position of well over half a million dollars...a HIGHER risk than someone with 1 property (which may only have a few tens of thousands in equity).

Why would banks rather lend to a complete newbie landlord on his first house, than to a seasoned landlord with a bunch of experience and "skin in the game"?

 

I am not just whining here, I actually am curious at the thinking behind these restrictions.  Do banks REALLY lower their risk by excluding possibly the most successful and responsible investors that have demonstrated their knowhow?

 

I just can't believe that the actuarial data back this up. 

 

 


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Homeloanwisdom

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Reply with quote  #33 

Logic doesn’t always prevail in lending, its rules based. For the majority of the residential lending market (1 to 4 unit properties) the rules are dictated by Federal Housing Finance Agency, overseer of the GSEs Fannie Mae & Freddie Mac. Their objective being lower cost financing for homeowners, not necessarily investors.  Banks want to make loans that conform to these guidelines so they can resell or bundle with other loans to sell for a profit or possibly sell the loan but still keep servicing the loan for a fee. Thus the majority of lenders won’t make the logical  11th loan for fear they won’t be able to resell it.

 Banks & credit unions can choose to make investor loans for those owning 10 or more financed units but only for a handsome reward (higher rate & fees) or shorter duration (5 year ARMS) . These are the kind of banks & credit unions (East West Bank & Advancial CU) you’ve been shopping for but are hard to identify as they are usually community or regionally based. Filling this void is the hard & private money lenders since they're more abundant and easier to deal with since they are logical and well rewarded (rate/fees).


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Thom MacFarlane
Banker-Broker NMLS #282091
thom@sibloans.com 858-485-0462
@theloanhelpdesk



brycewheeler

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Reply with quote  #34 
Thom--HomeLoanWisdon

Great rundown on all the requirements to get those California loans #5 through #10.

Its not easy but is doable.  Nice summary.

Bryce
Jeff

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Reply with quote  #35 
Quote:
Originally Posted by Homeloanwisdom

Logic doesn’t always prevail in lending, its rules based. For the majority of the residential lending market (1 to 4 unit properties) the rules are dictated by Federal Housing Finance Agency, overseer of the GSEs Fannie Mae & Freddie Mac. Their objective being lower cost financing for homeowners, not necessarily investors. 

 

I sorta get that the primary reason for consumer loans is for homeowners...but that can't be all they are for...or banks (or whoever is making the rules) wouldn't even go up to 4 properties--let alone 6 or 10.  They might go up to 2 (a primary residence and second "home"), but pretty much anyone buying 4 houses is an investor--and certainly anyone with 6 homes, or 10 homes is!  

If the "rules" aren't based on logic, or actuarial estimates of risk, what ARE they based on?


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Please God, make the second million easier...
Jeff

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Reply with quote  #36 
(855) 446-3179     

Finance of America 

This bank will do any number of houses but:

1.  Each house must cashflow pretty heavily (better than my houses) 

2.  Current rate right now is 6.125% (and that is with a buy down)

 

So if you want to have 20 or 30 houses this is your Bank (just be prepared for sticker shock)


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charmfinanceplc

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Reply with quote  #37 
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