I have just received 2 cash-out refinance offers for a refi on an investment property. They are both hard money financer’s working with my very low fico score (less then 600).
1st offer is for 9.19% on a 3 year arm w/ 6 month LIBOR and 6% CAP. 80% of LTV. (AND IT HAS A PREPAY PENALTY) which I don’t like because I am trying to sell the property. Brokers is charging 6 pts up front.
2nd offer is 8.45% on a 2 yr arm w/ 6 month LIBOR and 6% CAP. 75% LTV (and it has prepay penalty). Broker is charging 3 pts.
Are these decent deals? The property is located in Philadelphia, PA inner city area. What questions should I be asking and why does the GF Estimate not match the 1003 Application Fee’s disclosed? THIS IS A QUESTION FOR YOU GUYS WHO USE THIS TYPE OF FINANCE OPTION FOR YOUR CASH-OUT REFI’S . Any advise would be appreciated. THANKS
I’m not an expert with these kinds of deals, but I do know that certain terms are negotiable & you should let each lender they will be competeing for your business. If they can’t elliminate the pre payment clause then it could be reduced. You should also be careful that they don’t reword it in another way in another clause. I have seen this done before & I don’t remember what it is called. Read everything again & again.
These do not sound like the typical Hard Money terms we see in Philadelphia but look more like sub-prime programs and terms.
Most Hard Money we see in Phila runs 12-18% with 4-10 points and are not usually set up on Libor Arm products. Most hard money lenders are not offering 2 and 3 year fixed periods.
You should be able to buy down the pre-payment penalty if they are sub prime programs. If not in a hurry maybe you should shop around a bit. Ask those lenders what the rate would be if you bought down the prepayment.
I sent you a private posting with some other thoughts on it.
check out another lender, their taken advantage of your situation. With the points thier charging, you should be able to buy the pre-pay out, and buy the rate down.
These do not sound like the typical Hard Money terms we see in Philadelphia but look more like sub-prime programs and terms.
I concur. Those rates are B-C rates and programs.
Not knowing all of the parameters, I would have to say that the broker/Lender is not getting you the best deal possible. I would strongly suggest that you shop around and see if there is anything better available.