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Investor Mortgage Report 6.9.2020

What We Know:

The markets are stabilizing, and underwriting term times are back in pre-Covid standards.

With rates for single-family investor properties on conforming loans hovering around the low 3’s, it might be time to look at locking in and increasing your cash flow.

What This Means for You:

As an investor, there is money in the money—Your money!

Your credit score is the key to keeping more of your money. No matter your income situation, the better your score, the cheaper the money. Cheaper money equals more cash in your pocket.

Investor Credit Score impact

Last week, we showed you how much money can be saved with a good credit score. Now, it’s time to go over how to increase that score quickly.

How to raise your score and increase your cash and cash flow

Want to save money as an investor? It might be time to crunch the numbers

Do you want to keep money in your life or keep supporting a banker’s life? We’re pretty sure we know the answer to that particular question.

They say that Vegas was not built on the gambler’s winnings. The same can be said about banks. Banks keep popping up everywhere, even when most banking has gone online.

 

Why is that? Because they know there’s money in your money.

 

So how can you better prepare your credit score for an investor loan?

  1. Plan before you apply by checking your score online.
  2. Stop applying for ANY credit at least 60 days before a loan application.
  3. Raise your score with one or two of these simple methods:
    • Use private money when you can and keep it off your credit. If you can borrow from a private individual or entity that doesn’t report on credit to pay off/down your credit, do it BEFORE your next statement date.
    • Don’t close paid off accounts.
    • Pay down your credit cards before due dates. This will take extra cash now, but it will save you tens of millions in the future.
    • Keep balances below 30% of outstanding balances on revolving accounts like credit cards.
    • Dispute any item that should not be on your report.

This list does not include paying your accounts on time. That’s a no-brainer. You should always pay on time. There’s typically no quick fix for late payments.

Stay tuned, because next up, we’ll be covering how to check your credit on your own! In the meantime, if you have questions about your score, what it’s costing you, or what a better score could save you, reach out! We’re always happy to go over the numbers with you!

*All non-commercial and construction loans offered by TNS Loans NMLS #1719349

Investor Mortgage Report 6.2.2020

Conventional mortgage rates are showing signs of improving.

Thankfully, it’s looking like another great week for standard conventional mortgage rates.

So far this week, all evidence is pointing towards increasing stability and improvements on the conventional mortgage front.

  • Depending on whether you pay your mortgage person points or you have them wrapped into your loan, rates fluctuate between low 3’s and low 4’s.
  • We’re seeing great rates on the conforming side.
  • Every week, the non-traditional loans are reappearing with increased frequency.  
  • Some lenders have decreased credit score requirements to 680.
  • Rates are still on average above 7%, but signs are showing that they will drop soon.
  • LTVs are inching higher, but not to the degree we have seen them in the past.

In short: conventional mortgage interest rates are really good. But what does that mean for you?

How do you know when it’s smart to refinance your rental (or any) property?

 

Let’s face it: as rates drop, the question of whether or not to refinance runs through all our minds.

Would you like to find out (without the sales pitch from your mortgage person?)

Anyone can crunch the numbers in just a few minutes with just a few items.

Yes. It involves math. But we swear it’s EASY

For now, all you need is a piece a paper, a pen, a calculator, and your mortgage information. (You can pull this info directly from your mortgage company’s website). Then, follow these three steps:

Step 1: Locate the amount you pay monthly for principal and interest. (Ignore everything but your principal and interest (i.e. taxes and insurance).

Step 2: Locate the number of months remaining on your loan. 

Step 3: Multiply your monthly payment by the number of months you have left on your loan. 

That’s it! 

 

Let’s look at an example:

A: Your monthly principal and interest payment is $1,200

B: You have 288 payments left on your loan.  

C: $1,200.00 X 288 = $345,600 

(Scary sometimes to see how much you really owe, isn’t it? Don’t panic.)

Now, let’s say that you have an opportunity to refinance and lower your interest rate with a new payment of $1,100. Should you do it?

 

Let’s take a look:

On your new loan, you’d pay $1,100.00 for 30 years (or 360 months). That’s $1,100.00 x 360 = $396,000.00

If you refinance, you’d increase your monthly cash flow $100.00. However, as a result, you’d pay an extra $50,400.00 over the life of your loan! 

So, is the extra $100/month worth an extra 72 months (6 years) of mortgage payments? Does refinancing make sense for you financially? Well, that’s up to you.

Perhaps cash flow is more important at this time in your business life and paying the extra years is ok with you. That’s a decision only you can make. At least when you know all the numbers, you can make your call an educated one.

 

Try it on all your loans and find out what makes sense for you!

 

Your payments __________________ Months remaining _______________

Total remaining to be paid ___________________

 

Okay, we’re sure a few questions are swimming around in your head, so we’ll see if we can answer some of the most common ones upfront:

Q: “What if I’m not going to keep the property for 24 or 30 years? At what point does it make sense to refinance?” 

A: That’s coming up in the next article.

 

Q: “What if I want to use those savings and pay down my mortgage?” 

A: We’ll be addressing that in a future article as well.

 

Q: “What is my breakeven interest rate?”

A: There are so many paths you can go down and we’ll cover as many as we can. We’ll also provide a tool for you to run all these scenarios.

 

Today, it’s all about knowing your raw numbers.

Want an investor tool that can run these numbers (plus your breakeven rate and many more) in seconds? We have one in the works. Just get on our contact list, and we’ll let you know when it’s ready!

By knowing these numbers, you can save tens of thousands on each refinance.

 

Don’t feel like doing this or worry the math might overwhelm you? No worries! Shoot us an email with your current statement and we can run them for you.

*All non-commercial and construction loans offered by TNS Loans NMLS #1719349

Investor Mortgage Report 5.26.20

Mortgage industry is showing signs of recovery.

The Mortgage Market is Showing Signs of Being on the Mend.

What We Know:

The mortgage market is finally showing signs that it is starting to recover and heal. As states begin to lift travel and business closure restrictions and reopen for commerce, lenders appear to be relaxing some of their restrictions in-kind.  Last week, we welcomed back a few lenders offering loans outside the standard conventional box.

This week, we see even more positive progress, such as lenders expanding the LTVs up to 70% on their investor cash flow loans (based on credit score and lease.)

We are noticing the lending requirements are a little more restrictive than before Covid-19, but at least additional options are making a comeback. Hopefully, this upward trend will continue over the following weeks.

What You Can Expect:

A return to business-as-usual won’t happen overnight, of course. The lower credit scores and higher LTVs will more than likely take some additional time to return to their pre-COVID closure state. Lenders will want more data on the unemployment and rental payment front before expanding.

Real estate investors may have to be more patient for normalcy to return to their lending markets.

Rates in the standard-conforming market are coming down.  For investors, 30-year rates are in the mid 3’s for purchases and no cash-out refinances.  Cash-out refinances are still a big challenge for investors, and will more than likely continue to be so for the next few months.

Expect to find the expanded requirements (up to 6 months reserves for each property) to be in place with underwriters through the end of the year.

*All non-commercial and construction loans offered by TNS Loans NMLS #1719349

Investor Mortgage Report 5.19.20

Non-Conventional Mortgage Loans Are Making a Comeback…

Non-conventional loans are closing again

Non-conventional mortgage loans are getting funded again.

What We Know:

Finally, we’re seeing an influx of non-conventional mortgage loans being funded. Hopefully, this positive change is bringing some relief to both investors and their buyers who don’t fit neatly into the conventional mortgage lending box.
 
Mortgage loans in this lending bucket typically do not require tax returns but rely on bank statements or leases for income.
 
Even though some are back, requirements for securing these loans have increased and are a little harder to obtain.  The majority of the lenders have a starting point of a max 65% LTV and a credit score of 700+.  The good news is the rates have not skyrocketed. There are now lenders lending who had previously been turning away would-be investors.
Light at the end of the lending tunnel

There’s a light at the end of the lending tunnel again.

 

The Takeaway:

We are on the road to lending opening back up. The economic restrictions and resulting uncertainty appear to be lessening. Apparently, to the point where lenders are feeling confident enough to begin closing riskier deals again.
Make no mistake, it will be a slow process. But there appears to be a light at the end of the COVID lending tunnel. Stay tuned as we provide continuing outlook updates over the course of the coming weeks.
In the meantime, if you’d like to review your financing options for investment properties, feel free to reach out! We’re always happy to run your numbers with you.
*All non-commercial and construction loans offered by TNS Loans NMLS #1719349

Investor Mortgage Report 4.28.2020

 

States are slowly opening back up into an uncharted post-COVID19 closure world, but how does this affect the lending markets?

 

Some states have started to allow the gradual re-opening of businesses as stay-at-home orders begin to relax around the country.  What effect will this have on mortgages, rates, and availability of lending to investors?

 

What We Know:

Here’s what we think is reasonable to expect as we return to our new version of “normal”:

 

As businesses start opening up, there will be an influx of people employed and able to make their rent and mortgage payments.

 

The majority of the traditional lenders left investors out to dry over concerns of rents being paid. Government officials haven’t helped the matter with proposals to postpone or forego rent payments.  If tenant rents are not paid, how will investors react? Will they still be able to make their payments?  Will it affect those with larger portfolios to a greater degree than those with smaller ones?

 

These serious (and unanswered) questions are the main reason we have little to no funding options at the moment.

 

The only way we put these concerns to rest is by people going back to work (if they’re able.)  Feeling out the new “normal” flow of payments will help bring certainty to the lenders so that they can decide whether to open lending back up (at a limited pace and with tighter guidelines,) or keep it as-is (little to no options.)

 

The fate of the traditional lending world will hinge on payments: Those made by renters as they return to the workforce, and subsequently, those made by their landlords.

 

What You Can Do:

Be optimistic for more certainty over the coming weeks. As individual states’ economies reopen, let’s remain hopeful that jobs are still there, people want to go back to work, and that they are able to keep up with their payments.

Lastly, also let’s encourage government officials to stop putting out the idea that renters can “forgo” their rents.  This helps no one currently holding a mortgage (unless you want votes.)

 

Want to stay in the loop with the latest assessments of the lending climate, and ideas on how to keep your real estate investments funded in these trying times?

Sign up for our weekly industry newsletter and upcoming OPM webinar series here >>>

 

The Lending Faucet Has Been Shut Off. What Happens Now?

Everyone knows that you kill a business by cutting off their credit/finance. Once the credit is cut off, we are all in trouble.

 

Or, ARE we?

 

Did you hear the lending markets just explode/implode in on the investor market?  What felt like overnight (within mere weeks,) the traditional funding faucet was virtually turned off. Lenders across the country are pumping the brakes on loans for investment properties due to COVID19-related closures, job losses, and resulting economic uncertainty.

 

What does this mean for folks who rely on that normally steady stream of capital for investment real estate funding? The existing and would-be landlords? The fix-and-flippers? The fix-and-holders? The short answer: Without credit or funding, investing in properties becomes problematic. Therefore, MAKING money becomes much tougher. 

 

Notice that we said ‘tougher,’ and not ‘impossible?’ There IS another way…

 

Now is the perfect opportunity to create your very own banking system.

 

“What does that even mean,” you may find yourself asking? It means finding PEOPLE, not banks, with money—money that they would be willing to invest. This could be your mom, your best friend, your neighbor, or anyone else who has some extra funds that they want to put to work for their future financial benefit.

 

Don’t allow the banks to socially distance you from your investment income! Learn how to keep your business running steady now and in the future by having a consistent stream of OPM- or Other People’s Money- funding. 

Join us for our next weekly Webinar, where we’ll be going over market updates and the basics of how to transition your lending stream from traditional lenders to OPM funds, all while keeping it legal, keeping it safe, and keeping it honest for you AND your funding partners!

 

Get signed up here >>>>

Buying a Duplex – What NOT To Do

Whether you’re getting ready to invest in your first rental units, or you’ve been renting for years, it’s always a good idea to learn from other people’s mistakes. In this video, Chandler David Smith tells us about the lessons he’s learned and what NOT to do as an investor. Check it out!

Ready to start investing? Need some guidance? Then contact our team. We’re ready to show you how to invest and invest right!

Friday Fun: Wholesale

Want to make more with your rentals? Then consider buying discounted properties (i.e. wholesale). Ready to learn more? Contact our team today.

Investing Rules You Must Know

Every investor should know 3 rules of thumb:

The 2%, 50%, and 70% Rules.

If you don’t know what these are, check out this video from Bigger Pockets.

Ready to talk about your deals and how you can fund them with our 2-Step Loan Process? Then contact us today!

Thursday Tip: The 1 Percent Rule

Have you heard of the 1% Rule? Yes? No? Either way, check out this video from Matt McKeever about why you need to know about this real estate investment strategy.