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
Reason we’re cashing out is because it has’nt sold yet after being rehabbed and it’s tying up some much needed capital needed to purchase another property. Therefore, a cash-out refi give’s us the capital and some room to sell at the intended price with room to breath ::)…Again only issue I see with either deal is the prepayment penalty. I don’t want to hold te property as a rental so long term financing is not an option.
What is your credit score? There is plenty you can do with a less than 600 score. You should be able to get conventional financing if that is the only issue. What is your middle score?
You can definitely do better then those rates. Just because your credit is below 600 does not mean you need hard money. I have sent you a private message. Good Luck.
First, these loans are not hard money loans. These are called nonconforming (subprime). They are made through traditional lenders who have a little more flexible guigelines than your standard bank.
Second, the interest rates seem within reason but the points are pretty high.
Third, I am a little concerned for you in 2 aspects. One being the value of the house and two being thr property being for sale. It will be very important for you to discuss with your broker in detail about the length of time you have owned the property and any jump in value from the original purchase price. This issue will address seasoning requirements which most nonconforming lenders have restrictions to substabtial increase in the first 6-12 months. The other item to clarify is if the property has been listed on the market with an agent or on the MLS. Some lenders won’t allow you to refi if recently listed.
Be sure to address those 2 things with him so he has any relevant facts .
As stated in previous posts, these are not hard money lenders you are looking at.
Keep in mind that the prepay penalty is usually 6 mos. of interest. So, if you have absolutely no options and must do any of these loans, 6 mos of interest will be your prepay.