July 1, 2020 at 1:34 AM #818582
There is absolutely no difficulty in getting a loan if you qualify, and it only takes a couple of weeks if your situation is clean
There is no single mortgage rate that applies to everyone.
There’s a difference between a refinance with no cash out and taking cash out.
Having a HELOC or other 2nd can mean that you wont get the best pricing, even if you have a zero balance.
There is a lien against the property for the full amount of the line.
Paying off a HELOC balance when you refinance is cash out pricing unless the HELOC was used to purchase the property.
No cost loans for rental properties are not low, but if you understand that you are going to pay one way or the other, you can buy the rate down and save a lot in the long run.
Loan underwriting guidelines are idiotic. There are people with 800 credit scores who cannot qualify for a 50% loan yet others with a 680 score and 3% down payment will qualify.
Covid19 has created some temporary guidelines that can make qualifying extremely difficult for self employed borrowers.
Anyone who has had their income cut or on furlough may have difficulty.
Unemployed without other income don’t qualify at all, regardless of equity, credit score, net worth or size of their ego.
For those who do qualify, rates have never been better.
No cost loans are available, but you’ll never get the lowest rate.
Many people are fooled thinking they have no cost, but they really are paying fees.
For salaried W2 wage earners with good credit and stable income, loans can be closed & funded in 2-3 weeks.
HELOCS & Solar liens can complicate refinancing.
Having rental property can complicate refinancing.
30yr rates are available at 3.00% or less. The higher your loan amount the easier it is to get a true no cost loan.
Saving just .25% can mean a savings of $30,000-$40,000 over the life of a loan. Depending on your balance.
Most people are paying way too much in interest. Many don’t qualify to refinance but those that do qualify will waste a ridiculous amount of money over the life of their loan, without realizing what they are doing.
The key is not starting over at 30 years with the lowest payment. The amazing savings is making the same payment that you are making now at a lower interest rate. Possibly at zero cost.
The difference between 4.00% and 3.00% on a $400,000 loan is $120,000 of wasted interest
On a $500,000 loan the difference between 3.50% and 3.00% is $76,000 of wasted interest.
If you want a free analysis and explanation, just send me a message.
Some people are refinancing their primary residence and paying off much higher rate rental properties. There are various strategies to save a lot in interest.
I’m still seeing lots of people still at 4.00% or higher
If you currently have a VA loan, refinancing is very easy and rates are AMAZING. Free advice.
Have helped lots of Piggington posters & lurkers 🙂 HLSJuly 1, 2020 at 6:46 AM #818583
It’s been awhile since I had a a mortgage but perhaps someone can refresh me on IRS rules regarding investment interest expense…..
Hypothetically speaking, if I do a cash out refinance on my primary, say $500k,and the purpose of that $500k is to buy an investment property, I believe the mortgage interest would investment interest expense that I could deduct against the new rental. However, let’s say I don’t buy a property for 1 year. Could I deduct the mortgage interest as an investment expense too, if I simply stick the money into a money market fund? I think the answer is yes, but just wanted to check.
I don’t think I would have a problem qualifying, except I would need to finish my 2019 taxes this weekend 🙁 My one day/week furlough ends when the federal benefit ends this month , and for practical purposes I ended up making more money by not working that day than having to go back and work that day. I’m running out of government cheese so I think my next move would be to try to get some of the cheese from banks….It’s all fun and games until someone gets their eye poked out …lolJuly 1, 2020 at 8:50 AM #818585
Why would you need to finish your tax returns ?
2019 tax returns are not needed at this time.
For salaried workers 2018 & 2019 W2’s are needed + 2 recent pay stubs.
I can tell you from experience that some people who think they are God’s gift to a lender have a difficult time when they get turned down for a loan. It’s a humbling experience.
Nobody should assume anything about qualifying for a loan.
The guidelines can be ridiculous, and are rarely negotiable.
Underwriters are told what to do and MUST get an automated approval. They don’t make decisions,they follow instructions.
At the moment, subject to change, a $500,000 loan with at least 40% equity and a credit score of 700+, 30Yr Fixed is 2.95% with zero cost. Nothing hidden, nothing rolled in.
15yr is 2.62%
with 25% equity and a score of 740+ 30yr is 2.99% no costs.
Not everyone will qualify for this pricing.
Lower rates available with a cost
Lower loan amounts, less equity, cash out, having a HELOC etc is different pricing. The more equity you have the less a credit score mattersJuly 1, 2020 at 9:39 AM #818586
Last time I refinanced, they required me to complete my taxes or at least proof of my estimated tax payments.
As far as being a god’s gift to lenders, I wasn’t suggesting that. But I’m as boring as they come when it’s comes to a borrower….Verifiable W2 income, credit score OK, $500k would be around 40% LTV, and my HELOC I think I will close, since I no longer need an emergency loan fund since I have sufficient emergency cash. I don’t think I’ve ever been turned down for a loan, but to your point, knock on wood, there’s a first time for everything.
But again, the only way I would want to do this if I could write off the mortgage interest, both before I need to use the money and after the money is used for an actual rental purpose. Can anyone comment on the deductibility of the mortgage interest if that $500k isn’t initially used for a rental property purchase?July 1, 2020 at 10:42 AM #818591
Sorry, I was NOT referring to YOU as thinking you were God’s gift to a Lender…It was a general statement.
I can only determine that after talking to someone who thinks they are special, until I have to tell them that they don’t qualify.
Having an 800 credit score, with high income and only wanting a 50% LTV loan is not a guarantee that someone will qualify.
All of your debt enters into the process, rental properties, insurance & HOA on all properties etc.
Covid caused a problem for some with rental properties because they didn’t have enough reserve assets even though they had huge equity.
Another client could save a lot of money and is qualified & approved for a great interest rate, but his tenants won’t let an appraiser enter the property,
HELOCS are a 2nd lien against a property for the full amount of the line whether any of it is being used or not.
It really shouldn’t matter to a first lender, but the system requires it.
Having a $400,000 1st and a $100,000 HELOC is viewed as $500,000 of debt, rather than just $400,000 and can affect pricing.
Leaving a HELOC in place is possible, but requires a subordination, usually costs at least $250, and wastes several weeks.
It is definitely better to agree to close the HELOC completely and get a new one after the new loan funds.
Lots of ways to save so much money with minimal effort.
Saving a couple of hundred dollars a month is one possibility. but paying that couple of hundred towards principal every month adds up to a much greater amount of compounded savings, guaranteed to pay a mortgage off quicker.
I would not suggest getting serious tax advice here. Talk to a qualified tax advisor. You’re asking some serious questionsJuly 1, 2020 at 10:55 AM #818592
We refi’d a few months ago and saw that rates have dropped again! We used owning.com; they are currently quoting 2.75% 30 yr fixed no closing cost. We can’t use owning again for 12 months. Has anyone seen similar rate or lower for 30 yr fixed?July 1, 2020 at 12:58 PM #818593gzzParticipant
OCT: how smooth was owning.com’s process?
Does “no closing cost” mean no cost at all, or did you have to pay for an appraisal, title etc.July 1, 2020 at 1:32 PM #818596
[quote=gzz]OCT: how smooth was owning.com’s process?
Does “no closing cost” mean no cost at all, or did you have to pay for an appraisal, title etc.[/quote]
I thought their process went pretty smoothly. Truly no cost, only had to set aside money for escrow account (1 year insurance 6 months taxes) and wait for older lender to refund old escrow account. Only minor issues were it was just around property tax time and old lender had not yet paid taxes so we paid those, then few days before closing they decided to finally pay those so had to wait for refund from county. Also just before closing they requested another pay stub, assuming to confirm still employed as that was during time when 6 million people were getting laid off a week.
I’ve recommended several friends to them, bummed I can’t take advantage of their new lower rates.July 1, 2020 at 4:43 PM #818600sdrealtorParticipant
Fwiw owning doesnt do loans for self employed no matter how qualified or low the LTV is. Learned that by experienceJuly 1, 2020 at 5:37 PM #818605
owning.com 15 year is what I had before at 2.5…. The 30 year though…wow…. 2.75July 1, 2020 at 6:43 PM #818606scaredyclassicParticipant
Owning told me min 300k loan 4 best rate.July 1, 2020 at 9:26 PM #818611
[quote=Coronita]owning.com 15 year is what I had before at 2.5…. The 30 year though…wow…. 2.75[/quote]
30 yr is definitely cheapest I’ve found, unfortunately can’t do it since we already refied with them. Was able to find another lender at 2.875 fixed no cost and they have 15 fixed @ 2.375 no cost!
Yes they do not refi self employed and require 300K min, but under that would have had to have originated with much higher rate not likely in last 7 years, to make it worth their while.July 12, 2020 at 9:15 PM #818768treehuggerParticipant
I am locked with owning at 2.75 no lender fees, but today spoke with United direct lending (Jacob Cantor) and he offered me 2.75 no lender fees and $500 credit. I am also chasing a rumored 2.5 at loan cabin….currently have 3% with First Republic which I got right after Brexit a few years ago, going to call them in the morning and see what they say…… this is just crazy! Is it going to go lower??
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