Investor mortgage report

Investor Mortgage Report 4.14.2020

Why did all the banks just make it damn near impossible to get a loan on an investment property?

 

 

For lenders, times are more uncertain than ever.

 

With conventional/standard loans as the only lending option available for rental investors, lenders went and changed the rules…and not in the investor’s favor.

 

As of this week, the new underwriting criteria has hit 90% + of the market for investor loans on rental properties. Plus, most lenders now require a minimum of 6 months reserves (and, a lot of times, up to 12 months) for every rental property that has a loan on it. That’s right. If you have four rental properties, you now need at least 6 months of payment reserves on each property. That adds up quickly.

 

That may not even be the worst of it.

 

In addition, most lenders are not allowing borrowers to use the rental income from their properties to qualify. If they do, they might only allow a very low percentage of the rent (like 50% of gross rent). That means if you have rent coming into a property at $2K, they may only count 50%, or $1K, of that towards your expenses (if they allow you to use it at all). In this example, if the rental property has expenses at or above $1K (and most will) the underwriters will expect you to cover the shortage with other non-rental cash flow.

 

So, if you don’t have great credit (lenders have raised the threshold here, too) and other income to qualify for a new loan, you will be out of luck…for now.

 

We don’t know how long this will last. It might be weeks, but more likely months. Nobody will know until banks and lenders figure out how current stay at home orders will affect the markets.

 

So, why exactly is this happening?

 

 

Once the lenders get the data, they will adjust. Let’s cross our fingers that rents are being paid and, likewise, mortgages are kept up.  This flow of money will help bring lenders and loan choices back to our market.

 

What can you do?

 

  • Keep informed on what is happening in the lending markets. If you are selling properties, then stay updated for your potential buyers, too.
  • Keep paying your mortgages. This will help the overall market, but especially you when you are looking to borrow in the future for better rates (the rates are expected to be great after we return to some normal) or new opportunities.
  • Keep your credit score high and keep working with your renters to pay what they can when they can.

 

Remember the loans and rates will come back. When they do, be prepared to take advantage.

 

If you have a credit score at or above 760, and have ability to income qualify, then your rate estimates this week for conventional loans look like the following:

 

  • Paying closing costs rates for rental properties (1-4 units) in the high 3’s for a rate and term. Typical break-even point is between 2 and 2.5 years.
  • Paying little to no closing costs rates are high 4’s (best for strategies for keeping a property under 2.5 years).

 

If you want to know where you stand and what you can do, schedule a time to discuss your lending needs with us today by emailing info@investorrealestateloans.com.

What to Do When the Bank Says, “No.”

Don’t be controlled by banks. It’s time for you to take control!

That noise you just heard? That was the sound of conventional lenders across the country slamming the door and walking away from the lending on investment properties. For those of us who make our living through fix and flips, fix and holds, and other real estate investments, it’s not exactly a GREAT sound.

But if you listen carefully, you might also be able to hear the rumblings of coming change. Just because the banks are currently the bearers of bad news, doesn’t mean it’s time to give up. Take back control of your financial future by disrupting the chain and breaking the bank’s monopoly. And the good news?  It’s actually easier than it sounds.

How, you ask? Simple. Start funding your own deals with 100% OPM – Other People’s Money. Cash from your mom, your neighbors, your golfing buddy—really, this source of capital can come from anyone who has money and is looking to invest it. 

This easier-than-it-seems solution really can help you thrive now during a period of economic uncertainty, as well as far into the future. No matter the economy, you’ll never have to worry about being controlled by what the banks have to say. If they shut the door to funding on you, you’ll have a way to keep investing and continue turning a profit for you AND your lending partners. 

 

Want to see just how easy it can be to transition your current real estate investment business model? Join us for our next informative webinar session!

Just remember: Keep it legal, keep it safe, keep it honest. 

 

Establishing trust is KEY in this funding model. When you’re dealing with other people’s cash to fuel your investments, it’s critical to stay transparent and protect everyone’s best interests.

 

Want to know more? Sign up here for our next session. >>>>

Investor mortgage report

Investor Mortgage Report 3 30 2020

Investor Mortgage Report

 

 

What We Know:

Conventional mortgage lenders are clamping down on investors in a couple ways. (This applies to homes investors are buying for themselves (to live in) and the ones they are renting out.)

 

  1. Lenders are requiring between 6 and 12 months of reserves for EACH property.
  2. In some cases, lenders are not allowing rental property income to qualify for a mortgage.

 

Let’s all hope this changes soon. However, the reality is that investor loans make up only a small percentage of lenders’ volume and they don’t want to take on the extra risk of renters not making payments unless the borrower (you) can afford to carry it for 6 to 12 months.

 

What We’re Doing

Private money and subject to’s might be the wave of the foreseeable future. That’s why we are working hard on plans to help you expand this area of your business.

 

This is how we make our living, so we all need to figure out a way through this. Not only a way through, but a way to come out stronger and ready to dominate the next real estate market—whatever that is.

 

Stay tuned! Hopefully we have hit the peak of this craziness and can soon we can report good news on the easing of money for the investor world.

Mortgage Payment Relief is Here 3 27 2020

Mortgage Payment Relief is Here 3 27 2020

 

Good news for some mental and mortgage payment relief.

 

Most of the major banks and Fannie Mae and Freddie Mac (the conventional loan team) now have ways to help those requiring help with mortgage payments.  This does include some relief for multi family loans also.

This I believe will help some relax and get through the next few months without dumping properties on the market.

Let me know as you see any other positive news in the financing world as it changes very fast.

This is an article from Market Watch

 

This is out of the state of California and I would expect this to be the same in all states real soon.

Investor mortgage report

INVESTOR MORTGAGE REPORT 3 26 2020

INVESTOR MORTGAGE REPORT 3 26 2020

Investor mortgage report

Investor Mortgage Report 3 26 2020.

 

The Good.

 

After agreeing to purchase $200 billion in mortgage backed securities last week, the Fed has agreed to put more liquidity into the conventional loan market (this is the only market so far) and will buy up to $50 billion/day for the foreseeable future.

 

This will allow lenders who offer conventional mortgages in the market to continue closing loans at their current record pace.

 

That being said, they are still overwhelmed with the business. Plus, they now face new issues like unemployed borrowers and a slowdown in appraisal times and title availability.

 

The Not So Good.

 

With most of the buyers backing out of the market, the market for mortgage backed securities for Ginnie Mae is shrinking. These are the mortgage backed securities for FHA, VA, and USDA. This will impact some of the buyers for your homes.

 

What this means is all or most of the mortgage companies will either stop offering or will raise the credit and income requirements for these loans. We will see a slowdown in government backed loans until the Fed figures out a way to help.

 

Unlike conventional loans, the servicers (those that take your payments) are required to cover the payments to the investors when the borrower does not pay. When defaults rise, buyers stop buying loans and move towards the conventional market. Bail out please!

 

The Bad.

We will be lucky if 1% of the lenders who were lending outside the conventional box are still around (or halt operations) the next 2 to 4 weeks. This is a very big pool of loan products that rental property investors use if they are out of the conventional box. The options are gone for now!

 

 

The local banks and credit unions.  Most are on hold and taking an approach of “wait and see unless you have a great deal and are a good client.” Call them and check in to see if they are lending. If not, ask them when they will be back in the market.

 

We will keep you informed as lenders change course and start funding loans again for investors.  It’s not IF but WHEN you should be ready. Focus on deal quality, keeping your financial condition strong (keep making your payments), and develop a portfolio of your work.

 

A couple weeks ago, all lenders were trying to get your business. Now those who make it easy for lenders will get money.

 

We will be doing an Investor Mortgage Report every Monday, Wednesday, and Friday. If you want us to send you a copy, provide us with your email and we will add you to the outgoing list. That way you’ll know the moment lenders start coming back.

 

Investor mortgage report

Current State of Real Estate Financing: March 23, 2020

The information below is to simply inform you and help you make educated decisions about your investments. It is NOT to instill fear or anxiety. We’ve had more than enough of that lately.

What We Know

We have spoken to banks, lenders, title companies, and many others in the industry. This is what they’re saying:

Title: Most are still open and recording documents (even if the counties they work in are not).

Banks/Lenders: Most are still open for business, but lines for financing are forming fast. Don’t wait to get in line for yours!

Non-QM Lenders: Most have closed and are not able to provide funds to investors at this time.

Bottom line: The number of lenders and loan products are dwindling. That means lines for available loans are going to grow longer and longer. It’s smart to hop in line now. The longer you wait, the longer the line will be.

What We DON’T Know

It’s fair to predict that the road ahead will be tough for many real investors. But rest assured, it’s not all doom and gloom! Even now, creative financial measures are being taken to help investors find ways to make money during this volatile time in our industry.

How Investors Are Reacting

Right now, investors seem to be experiencing a variety of reactions. Some are stumped and frustrated with their investments/investment plans. Others are determined to make the best of these dark times, and are discovering innovative ways to maintain or increase their cash flow

What YOU Can Do

  • Get in line! If you want to secure a loan for your next deal, you need to get in line now. The longer you wait, the longer the lines will grow.
  • Get creative! There are many ways to manage your real estate portfolio. Need help thinking outside the box? We can help.
  • Stay positive! It’s so easy to get sucked into the media mayhem of fear, uncertainty, and anxiety.
  • Stay active! This is a rare, unique time in our world, and as difficult as those times might be, we all know they pay off in the long run. But ONLY if we take advantage of their unforeseen opportunities. So don’t sit back wait. Dive in. Act now!

Money helps drive the real estate investment engine, and we all need to stay informed on where it’s flowing. Those who are well capitalized and looking to benefit from this market will need financing. And there are still many options available.

What are you experiencing?

Want to chat more? Contact us with your email address, and we’ll keep you up to date as the real estate investor market changes.

Feel free to send us questions, comments, and feedback! We’re here for you during this turbulent time.

There’s Always a Silver Lining

The past week has been a whirlwind. Markets have fluctuated, small businesses have been hit hard, and lenders all around are pulling the plug on real estate investors.

But you know what?

There’s ALWAYS a silver lining…you just need to know where to look.

Right now, that place is investor-friendly lenders.

Don’t wait around for banks and lenders who only dabble in real estate investments. Jump in line and start working with lenders who fully support and understand what you do.

We are not running scared like traditional banks and lenders. In fact, we’re charging full steam ahead, eager to keep you and your investment business succeeding.

Because you know what?

There are golden opportunities ahead, and we want to make sure you get to take advantage of them.

But you have to act FAST, before long lines for loans form and you’re forced to wait. Waiting means missing out on a wide array of cash flow boosting opportunities.

Let’s get going and create your silver lining today!

Be Active AND Proactive

A lot of real estate investors are wondering what they should do right now as COVID-19 sweeps the nation. Should they sit and wait for everything to calm down? Or should they push ahead and keep investing?

We think you should be active AND proactive.

Take the bull by the horn and find a way to BOOST your cash flow during this strange, uncharted time in our world.

How can you do that? Here are a few tricks to consider:

  • Lower your rates: Rates are at an all-time low. If you wait until the market rebounds, you might miss out on those rates and get locked into much higher, more expensive rates.
  • Improve your return on credit (ROC): Wherever you are with your financing, it’s always worth a checkup to see if you can get a Return on Credit increase.
  • Skip a payment or two: With rising job uncertainty, some of your tenants might have a harder time covering their rent. Put yourself in the best financial situation possible. Give them a couple months of no payments. And once they start paying rent again, consider lowering their payments. If they’re safe, you’re safe.
  • Get out of private loans. One simple point can increase your cash flow. For example, a $300K loan could mean hundreds of dollars in your pocket.
  • Look at interest-only loans.
  • Lower your term and rate.

Don’t wait until the markets rebound. You might miss out on months or even years of lower payments.

NOW is the time to act AND be proactive.

Let’s get the process moving today.

The Current Supply and Demand Issue

A couple of weeks ago, we had A LOT of loan options for investors.

In fact, it was a little overwhelming.

Now, only a week after the President announced the state of emergency, we have about half the options.

Next week, we’ll probably have even less.

For example, a good friend of mine who is a mortgage broker dabbles in investor loans. This past week, he lost all of his products for investors, except conforming loans. Since he is so busy, he decided to stop offering loans to investors.

Your local banks are also putting a hold on investor loans. Since most of their clients are small businesses, they need to wait to see how their portfolios handle the shutdowns across the nation. With small businesses being forced to close, their current loans and deposits are in jeopardy.

Not only that, but small banks also have loans out on real estate that rely on small business employees to pay rents.

Banks are going to be more selective right now.

What does that mean for you?

It means:

  • Less options and fewer lenders
  • Longer lines (longer than the ones you waited in for groceries the past two weeks)
  • Higher pricing and lower LTV’s (on non-conventional loans)

This is a supply and demand market, and with only a small portion of lenders still working the investor loans, the demand is sure to outweigh the supply.

DON’T WAIT!

There’s no doubt you’ll have many investment opportunities coming your way. But to take advantage of those opportunities, you need to have the financing ready to go.

Get your team together NOW! Make sure those helping you don’t just dabble in investment loans. Make sure it’s their primary focus.

 

Get In Line NOW

Markets for investor loans are changing rapidly.

Day by day, the amount of funds available are SHRINKING.

A week ago, it seemed like everyone offered investor loans, and they based those loans on:

  1. Credit scores
  2. Lease options

This week, we have seen these same lenders close these lines or reprice them. Furthermore, they’ve made qualification tougher.

Why are lenders doing this? A couple reasons:

  1. The closing of small businesses such as restaurants, bars, gyms etc., has created THOUSANDS of unemployed tenants. Plus, most governments are not enforcing evictions.
  2. Resources are stretched thin with the refi boom, and there are divisions in the mortgage industry. For example, some appraisers refuse to work.

What does of this mean for you as a real estate investor?

It means it’s going to be harder to get a loan from these banks. Why? Because the loans are becoming riskier.

When your loan is based on leases and a large portion of your tenants are out of work, that puts strain on rental property owners. Add on the fact that governments are not enforcing evictions, and you have a group of lenders who are not willing to take the risk.

But that doesn’t mean all lenders are pulling the plug. It just means your options are shrinking, and they’re shrinking QUICKLY.

So, what should you do?

Easy.

Take action NOW!

Get in line with a lender who can help you and is willing to take the risk. Don’t wait for things to blow over. If you do, you’ll be at the end of a line longer than the lines for toilet paper.

Let’s get the process moving TODAY.