I’m looking to refi an FHA investment property and have ran into road blocks with Quicken Loans. According to Quicken in order to refi I will need 6 months PITI reserves for each mortgaged property. I have 3 mortgage properties which comes out to $35K of reserves for 6 months. The 6 months reserves sounds a little too much. Is it not 3 months? I’m short about $10K in reserves “for show” aside from borrowing from a friend. Any ideas or solutions someone can propose?
You need to find your self a mortgage broker!!
You need that broker to shop your loan to find the best fit. Things have changed a lot in the last 5 years in regards to refinances and reserves. As an investor I would never go through a nationwide mortgage service for investment property, quicken is much like approaching a single bank, very much set in their own ways!
Thanks greatly appreciate the feedback. Do you think other lenders will bypass the Fannie and Freddie requirements of 6 months reserves? Do you know any that you could recommend?
In conventional financing banks and lenders loan money based on solid lending standards, which may require between 3 and 6 months of reserves for rental properties. These loans are made then sold in the market to funds and buyers including Fannie and Freddie.
Find any “Mortgage Broker” who knows your area and market and they will find your lender!
Mortgage Brokers are licensed by state so it is unlikely any mortgage brokers I know can make loans in your state!
The 6 month fannie requirement is if you have MORE than 4 mortgages. You said you have 3, do you have two other homes possible in Hard Money? They can find a house that has a lien against it and count that as a mortgaged property (ask me how I know that)…
If you only have a total of 4 or fewer mortgages the 6 months reserves should not be a Fannie requirement (but yes some banks have their own overlay requirements that might require such)
I have heard that the 6 months of reserves can be waived if you enter into a 12 month contract with a reputable and licensed property management company. You may want to check with your lender to see if the is a possible loophole. The reasoning behind this is that the PM has more experience handling such properties and thus is less of a lending risk.
That’s pretty interesting because I only have 3 mortgaged properties. I have no other loans in Hard Money.
I’m looking around to see who can help. The properties are in Massachusetts.
I was not aware of that management company rule and will investigate and see if it applies to Mass properties.
Thank you all for your feedback.
I can’t wait for these restriction to get lessened they are making it very difficult for us little guys to break out.
does any know a mortgage broker in the miami area thatt works with investors?
Unfortunately, the Fannie requirement is 6 months PITIA. No way around it. However, depending upon your loan size and LTV, you could refinance with a portfolio lender if you’re not opposed to going that route.