I am working on getting a 90/10 loan for my third home and was told to expect around 9.1-9.25% on the interest rate. My loan officer mentioned that it was because I had to go with a “stated” loan because my debt to income was hurting since I already have three mortgages showing up on my personal credit file.
Is this normal? Or can I do better? I have a 6 figure income and a 699 mid credit score.
Hello, I mostly work with HML and private money investors. But I would think that with your financial status, you could do better. There are many traditional programs available today.
I would suggest searching around and finding other funding from a different company. Many people post here on this forum with great alternative financing ideas. Maybe one will present itself.
However, IF you can get a loan for the interest rate you are quoting, you might consider taking it and being happy.
I’m not saying you cannot beat it by a “small” margin. But, lets review the facts you posted.
You want a 100% LTV loan
For a 3rd home!!!
And you already have 3 mortgages showing on your credit report.
(you did not say how many of those are investment properties, as it does make a difference but I assume it is only one as this is your 3rd home)
By the way do you understand the way lenders look at a 2nd home vs a second home that is an “Investment property”??? With an investment property, you get to use 75% or so of the rental income to add to your normal income to help your Debt ratio.
With a Second home you do not!
A “Second home” is a “TYPE” loan just as a Owner occupied or Non Owner Occupied are two seperate “types” of loans
With a second home the lender uses 100% of your 1st mortgage and 100% of your second mortgage in the calculation of your Debt Ratio.
Now you are asking for a 3rd home, which means 100% of the 1st, 2nd and 3rd mortgage will be used to calcualte you Debt Ratio.
It is no wonder that it is expected that you would have to use a Stated Income Loan.
Last but not least, 699 is a good credit score but by no means is it a great score. If you would have looked to do a 100%, stated income loan one year ago, I am not sure you would have found a lender that would have even considered it for a 3rd home or even for a 2nd home.
With all that said, I would recommend you shop around and ask questions. Personally, I doubt you will find a significantly better rate for a 3rd home loan… Considering the facts you presented…
Please clarify the loan option your consultant is advising would be best for your portfolio goals.
Is this a 90% loan with you putting 10% down or a 90% loan with a 10% 2nd. If the latter, then what is the rate and term on the 2nd. Speaking of term, you never mentioned if your 90% was a 30yr or an ARM. How long do you plan to retain this property? Do you expect it to appreciate greatly in the next 5 years? Is your plan to refi or sell and use the great appreciation for additional properties? Is your plan to hold for retirement as an income source?
I hope the loan he has does not have a prepay.
Since I do not know all the details, I can only speculate that YES, the rate is abosolutely high. Maybe your consultant is not well advised of all the programs available for investors. Sounds like this might have been a nonconforming loan.
Your score is above average, six figure income (although not sure what your liabilities are), and hopefully some assets.
My recommendation is to have a 2nd opinion based off a short consultation with another professional.
I don’t know all the details yet, this is a 90% with a 10% second; I am still waiting on the actual terms but my when my lender called me yesterday and mentioned the best they can do is hope for a 9.25% loan I was a bit skeptical and wanted to see if this number sounded high to everyone else.
As a client you should have the option of locking in your rate for a 30-60 day period once a contract has been accepted. Unless you plan on looking for several months the rate should not change that much in order to “hope” for a rate.
The figures you are hearing should make you feel confident in your investment transaction. A mortgage consultant’s job is to provide professional financial advice. You wouldn’t walk into any financial advisor and give him $100,000 expecting to hear “well, we’ll hope to meet your retirement goals”.
There really are some details that need to be addressed 1st to make sure what terms would be available. You may feel a 1000 times better after doing so.
I assume that hes pricing this as a second home…and giving you the 100 ltv. I dont know the details of your credit but if yoour dti was at 50% you should be able to get around 6.85-7.85%…which I think would be a very competitive rate for 100% financing on a 2nd home.
I think you should do yourself a favor and shop around a little bit. I also do not know the details, but maybe…just maybe you are talking to an inexperienced broker or even one that is trying to backdoor you pretty hard. I think you should consult 1 or 2 more brokers before going through with this loan. At least give 1 more a shot. Thats my 2 cents…
I have a question about this. I’m in a similar situation right now. I too have a beacon in the high 690’s to low 700’s. And Im looking at buying a piece of property through forclosure auction. Whats my best way to do it. I hav’nt found any private investors yet and the time is running out. I posted on another forum abou this but so far no answer. If I go with tradition finace methods its gonna take at least 30 days to close. So what do I do? DDC
Hard money lenders can get you closed in 1-2 weeks. If you are buying a property that does not need to be rehabbed then you should be able to get 100% financing if this is within 65-80% of the as-is value.
Rates usually between 12-15% and 4-6 pts.
Mortgage consultants usually have these contacts that can help you out.
If you do need rehab money as well, this can be accomplished.
I would question why they are doing it as a 90/10 and not an 80/20. Rates for loans above 80% (1st mortgage) will be higher and depending on your circumstances, the rate could be close to this 9% rate, but that seems very high.