Help Me I'm Puzzled???
I have gone to a local bank that is known for lending to investors and their program looks like a bad idea to me. I am new at this but it seems to me they are using a formula to decide how much they will lend on a property that is almost fool proof for them. They were referred to me by a local mortgage broker who handles only owner occupied prop.
I have good credit 690 range score and I think I should get preferred terms but this is how it breaks down.
650 per mo rent ==45,282 to them no matter what the appraisal is. They say they will do 85% LTV but it seems to me that the only thing they are concerned with is rental. It is like they are fixing the terms to look like they are competitive on the face of the deal and then you get hooked up with them and that is not the case.
They use a 10% vacancy
4% management
1% replacement reserves
And something called a debt coverage ratio of 1.25
If I tell them the rent is 750 I guess they would go for it.
In my area 2 bedroom homes are the only ones you can get for 45k or mobile homes, which they do not lend on. The only other choice is rehabs and they will do them.
And I can’t leave out they want to offer a 7% 15 yr fixed or an ARM that starts at 3.99 with a floor of 5 and a ceiling of 8 amortized over 15 years. These are the Options.
Give me guidance oh great ones I am puzzled.
:-o
Get a couple different quotes from different places and get a Good Faith Estimates. Better yet, get Truth in Lending statements. The TIL will allow you to compare apples to apples. (compare APR)
These guidelines are not set in stone...there are many compensating factors.
The above is not a bad deal, but not the best. Shop around and let them know you are looking for the best deal and you'll find it.