Daily Mortgage Rates LIVE - 09/11/2024 - Fix/Flip Loans

Ready to transform rundown properties into dazzling investments? In this episode of Daily Mortgage Rates Live, we’re diving into the world of Fix/Flip loans! Whether you’re a seasoned renovator or a first-time flipper, this episode is packed with insights on how to finance your next project and maximize your returns.

We’ll cover the essentials of Fix/Flip loans, including how they work, what lenders look for, and the best strategies for securing funding. From understanding the different types of loans available to navigating the application process, we’ve got you covered.

Tune in to get the lowdown on Fix/Flip loans and learn how to make your next property renovation a smashing success!

For more episodes visit: https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

About The Mortgage Calculator:

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! 

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of over 350 licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages, P&L Mortgages, Asset Based Mortgage Programs, No Ratio CDFI Loan Programs, DSCR Investor Mortgages, Commercial Mortgages, Fix and Flip Mortgages and thousands more!

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Catch all the episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

Check out all episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! Non QM Loans include Bank Statement Mortgages, P&L Mortgages, Asset Based Mortgage Programs, No Ratio CDFI Loan Programs, DSCR Investor Mortgages, Commercial Mortgages, Fix and Flip Mortgages and thousands more!

To apply for a mortgage please visit our Quick Mortgage Quote Page at https://themortgagecalculator.com/Mortgage/QuickQuote

The Mortgage Calculator is a registered DBA of Mortgage Calculator Company LLC. NMLS ID #2377459. Programs and rates are subject to change without notice. Mortgage Calculator Company LLC is licensed in the following states that require specific licensing disclosures: AZ (#1040352), CA CFL (60DBO-171188), GA Georgia Residential Mortgage Licensee (#2377459), IL MB.6761755 Illinois Department of Financial and Professional Regulation, Division of Banking, 100 West Randolph, 9th Floor, Chicago, IL 60601 1-888-473-4858. Not licensed or conducting business in New York.

For more info visit https://themortgagecalculator.com...

Transcript

Restream recording Sep 11, 2024 • 03:04:43 PM: 0:09

So welcome everyone. My name is Kyle Hiersche. I'm the COO of the Mortgage Calculator joined here by our president Nick Hiersche and our CSO Jose Gonzalez. We are a lender that specializes in non QM loans and what we do every weekday at 11 a. m eastern on the shows. Go through our actual live mortgage rates for a few different programs. Then we do a deep dive into a different loan type and today's loan type is going to be fix and flip loans. So we'll go through some cool options for that but first let's check out the rates for today. So Nick, if you're ready, let's get started. Let's go ahead and pull up today's rates and see what they are looking like. Alright, continues to be good news, and the rates continue to drop. So we'll check out the rates for today. It is September 11th, just after 11 a. m. Eastern. So all of our standard programs here are live with their initial rate sheets. We'll set up a standard scenario, compare the APR across the programs. If you'd like a full breakdown and itemized loan estimate, itemizes all the fees. Please get with one of our team members, we have over 300 loan officers to help you out. For the demo, we set up a standard scenario as we do every day, standard single family home. We'll do 500, 000 purchase, 400, 000 loan amount, that corresponds to 80 percent LTV, 20 percent down payment. We'll set an estimated 760 credit score and an estimated 40 percent debt to income ratio. So, let's check out the rates today. So pretty amazing here. We'd love to see the rates go down and, uh, some more good news today for rates. So it should continue to go down throughout the day. First up our 30 year fixed conventional for a primary home. Typically the most common option people think of when they think of a mortgage. 5. 625 rate coming in this morning. Final APR, 5. 939. And if for any reason our customer doesn't qualify for a standard conventional option, typically the next option we want to quote is an FHA. FHA allows more leniency on credit issues and a higher debt to income overall. And FHA comes in today, 4. 875 rate. Final APR, 5. 829. Including the mortgage insurance, FHA requires upfront and yearly mortgage insurance. Now, if our customer qualifies for both options, it appears FHA is a touch cheaper, but remember it does require that upfront and yearly mortgage insurance, so definitely a decision that they would need to make. And moving on to our VA. Definitely, uh, some good movement there as we keep seeing everything drop below fives. Awesome. VA is coming in today for eligible veterans and active service members 4. 99. Finally, PR with a standard funding fee here, 5. 287. So notice if our customer qualifies for VA, it's going to be much superior to FHA or conventional. So definitely a great option. Anybody that's eligible should definitely take advantage. And the final standard option here USDA only for properties in rural areas USDA eligible areas the property is eligible and the borrower is eligible these are great options to consider rates as low as 4. 875 today final IPR 5. 589 with the standard fees here so notice our customer is shopping in these areas. They're going to probably compare to an FHA, which USDA is going to be a touch cheaper and cheaper, cheaper than conventional as well. So definitely a great option for customers in those areas. And that rounds out the standard options that any banker lender has. And if our customer doesn't qualify, unfortunately, they may have to deny the customer. But we have 5, 000 plus other options starting with our non qm alt doc here for a primary home. So if customer doesn't qualify with conventional docs, two years of tax returns, needs to use alternative docs, we switch to this program. We can use bank statements, 1099s. PNLs, all kinds of different options rates today for bank statement or similar 6. 125 final APR 6. 450 as usual, within half a point of conventional to switch to all docs. Absolutely amazing. And we can use all docs for investment properties and tons of different options for investments. So first up our alt doc option for investments, bank statement or similar 6. 625 rate. Final APR, 7. 042. I believe that went down a touch from yesterday, which is great. And we'll compare that to our other investment property options. First up, our conventional. We don't have any government options, so no USDA, FHA, or VA, but conventional does work for investments. Rates as low as 6. 5 today. Final APR, 6. 838. And the next option is our favorite option, which beats conventional today. Absolutely amazing. Our DSCR, no income, no employment needed. Just simply use the estimated rents to determine a DSCR ratio for these loans. The estimated rents can cover the estimated expenses. That's a positive DSCR ratio over 1. 0, which is preferred. For all these demos, we put 1. 5 so we can see all the best programs. This three year prepayment penalty option went down from yesterday, which is amazing. We'd love to see the downward movement Raise us on 6. 25 today final apr 6. 5 1 6 beating conventional absolutely amazing and we can sweeten the deal with a five year prepay Coming in today at 6. 000 can't wait till this drops below six. That's going to be amazing final apr 6. 321 Beating conventional absolutely amazing And our final DSCR option is a no prepayment penalty option. Not going to quite beat a conventional here with no prepayment penalty, but very comparable rates as low as 6. 75 final IPR 7. 080 to do DSCR when we have no prepay, which is very comparable to conventional. I'd still say a hundred percent of investors would prefer a DSCR loan in this case. And the final two demos, second mortgage is very popular these days. Many customers have still a low rate first mortgage lower than the rates you see here. And still want to get cash out. No problem. We can do that instead of using a HELOC, which is the traditional option. We have these new 30 year fixed second mortgages for a primary home to get cash out rates as low as 8. 125 on APR 8. 527. Again, lower rates than a HELOC, not adjustable like a HELOC. And non QM programs so we can use fake statements and similar. Same option for investment properties to get that cash out. Rates as low as 9. 5. Final APR 9. 739. And again, key locks are rare for investments. So this is an amazing option for investors to get that cash out. Even up to 80 LTV with a second mortgage. And now we'll switch to our topic for today. Something that we can't quote live unfortunately. Oh, but Jose, our expert here can go into details. On one of the most popular products fix and flip loans. So, uh, these are loans that are very specific with specific requirements and are very popular, uh, but are difficult to quote because every deal is in and of itself a quote. So Jose is going to make some big assumptions today on some deals I'm assuming and, uh, uh, give us some numbers, but just remember every deal is different when it comes to fix and flip. So Jose, what do you got for us today? Good morning, everybody. Thank you for joining us for daily rates live with the mortgage calculator of fixed flip loans. Those of you that may have caught our burr training the other day. This is the integral purchase loan usually for the fixed flip transaction. This is a loan that then the investor will refinance out of, uh, when they're looking to fix and hold as opposed to fix and flip. Um, this is a short term bridge loan, all fixed flip loans, whether it's a, whether you're going to hold it or whether you're going to sell it, they still call it a fixed flip loan, just like they call a DSCR loan. Right. Um, so, uh, this is a short term bridge loan, uh, interest only, uh, depending on the ROI, which is return on investment in the deal. You are able to build even build in interest reserve. So in some cases, if there's a good profit in the deal, you may not even have to make any payment directly out of pocket. It can come directly from the flip. All of it can come directly from the flip. Uh, most importantly for the investor, uh, I call these fixed flip loans, credit preservation or credit score preservation loans, basically because the investor does not use his personal credit like credit cards. Thanks. For example, to renovate the property because if they have the intention on keeping the property and refinancing into a DSC or loan, they definitely definitely need to have that credit score in good shape. And you know what happens when you run up those credit cards balances is you lower The scores. So definitely, uh, investors out there are the successful ones used to fix flip loans. And when you consider that it for a highly experienced investor of with at least more than 10 or 15 flips in the last three years, they can even attain up to 90 percent loan to cost, which would mean they only have to give 10 percent down, uh, at the closing for the purchase and then the rehab. It's financed at 100 percent of the rehab cost. That would be absolute best case scenario. So let's see the scenarios that I have for you today to see if our, how close our flipper gets to that, uh, 90 percent LTC unicorn. So in this scenario here, our investor has 10 plus flips in the last three years, and it's a fairly Profitable flip. Uh, they are getting 87 percent loan to cost only 12 and a half percent, 12. 5 percent down payment and a rehab is funded at a hundred percent. So let me show you the breakdown here. So we have 115, 000 is our purchase price. Uh, since we are getting, uh, 87. 5 percent loan to cost, we are at 12. 5% Down payment or 14,375, and this is the fixed flip loan analysis. Here we have 30.49 ROI right?$210,000. Was was is our a RV and here you where you can see the loan to cost and the A RV. LTV, right? And here's our flip details. We had 115, 000 as his value, 115, 000 purchase price, 26, 000 in rehab, and this was our interest and our discount total cost. So that's how, um, The numbers get calculated and the end result, since it is a profitable flip, is what you see here. The nice low interest rate, uh, low cost on that rate and high loan to cost. So this is our heavily experienced flipper gets a sweet deal. So now conversely here, so you can see the same scenario, the same ARV. Um, the same, uh, rehab budget, purchase price, everything, credit score. The only thing that I changed in this scenario was that our investor now has only one flip in the last three years instead of 10 plus, and the difference is. That the loan to cost is reduced to 80%. That means that our flipper has to give 20 percent down. Still a good ROI, hence they still get, uh, you know, 80%, which is still very good. So 92, 000 is the disbursement at closing. 23, 000 is the down payment. And the rehab is financed at a hundred percent. And you, there you see the ROI is still very good. The gross profit. All the numbers are good here and he gets 10. 74 with a one point cost actually on that one. Let's go back now and look at another common scenario. The fixed flip delayed finance refinance rate. Our same flipper with 10 plus flips in the last three years experience. And this is where the individual purchases the property. For cash and then is looking to refinance, uh, to get the money back that they put in plus do the flip. So here are borrower gets 80, 500, uh, disbursement at closing, which is pretty cool because I had it set up that the purchase price, uh, was 80, 000. That's what they paid for the property. And now he's going to get that initial, uh, money back. Plus he's going to fund a hundred percent of the rehab. So these are numbers are known to cost is 73. 23 and our ARB LTV is 50. 71. Right? So 10. 24. And that is our information right there. So very good deal. He gets 10. 24 and it's one point charge on that rate. So they, They get to recuperate the cash that they laid out and they get the full 100 percent of the 26, 000 rehab budget. That's the key here, folks, right? You're getting 100 percent of the rehab. And in this particular scenario, he gets all of his cash money. And our last scenario here is a fixed flip refinance. This is where someone purchased the property with hard money. Or, you know, some type of financing, uh, and in this case, again, I'm going with the 80, 000 debt and they want to refinance the, the debt, right? So it was purchased with debt, not cash, and then they want to also get rehab and in this case, you're looking at 10. 74. Interest rate and the borrower gets 69, 000 out of the 80, 000 that he owes. So the bar is going to have to come up with some money at closing 11, 000. Uh, but they will get a hundred percent. Of the rehab finance, right? So we can see the breakdown right here. Our ROI, our, uh, loan to cost of 65. 47%. And this is our deal here. And our borrower paid, uh, in this case he paid 1. 25 points. Little riskier transaction. So you've seen here the four types of transactions typical of for a fixed flip loan. The straight out purchase, uh, With heavy experience to straight out purchase with light experience, the delayed finance, uh, refinance when they bought it cash and now they want to get their cash back and get the rehab and, uh, the, uh, refinance of the, uh, Existing loan that they purchased it with so that now they can get renovation money instead of using their credit card. So great examples here and awesome for all of our investors who we love to work with because we love, uh, financing. The purchase of the flip, and then we love financing the refinance when they exit out of the flip into the hold. All right, perfect. I do not see any questions here, but definitely great programs and options there for flippers out there or soon to be flippers. Don't see any questions still. So we'll go ahead and wrap it up. Remember that we do the show at 11 a. m. Eastern every weekday, where we go through the live rates, and then we do a deep dive into a different loan type. So we will see you all tomorrow with a new loan type at 11 a. m. Eastern for the next episode of daily rates live with the mortgage calculator.