Daily Mortgage Rates LIVE - 10/16/2024 - Profit and Loss Loans

In this episode of Daily Mortgage Rates LIVE, we dive into the world of Profit & Loss (P&L) Loans, a powerful option for self-employed borrowers and business owners who rely on alternative forms of income documentation. Instead of traditional tax returns, P&L loans allow borrowers to use their profit and loss statements to prove income stability and qualify for financing.

We’ll discuss the ins and outs of these loans, including what lenders look for in a P&L statement, how to assess a borrower’s cash flow and expenses, and the key qualifications needed to secure this type of loan. Learn how this product is particularly valuable for those with fluctuating income or complex financial situations, and get tips on how to guide your clients through the process. If you're looking to deepen your expertise in alternative loan products, tune in to explore how Profit & Loss Loans can open up new opportunities for both borrowers and lenders!


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 usin

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 Oct 16, 2024 • 03:07:10 PM: 0:09

All right. 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 on the show at 11 a. m. Eastern is go through our live mortgage rates. Then we do a deep dive into a different loan topic. And today's topic is going to be profit and loss loans. Something we're very familiar with here at the mortgage calculator, because we In non Q and loans and work with a lot of self employed borrowers. So we'll get into that here shortly, but first let's look at the live rates. So Nick, if you're ready, let's go ahead and pull up today's live rates and see what they're looking at. All right. So we'll check out the rates for today. It is October 16th, just after 11 AM Eastern. So all of our initial rate sheets for the day. Fire live. We'll set up a basic scenario to compare the APR. If you'd like a full breakdown, full loan estimate with all the fees itemized, please get with our team members. They'd be happy to send that over. For our demo, we always set up a single family home, single unit, a 500, 000 purchase price, 400, 000 loan amount corresponds to 80 percent loan, 20 percent down payment. And we set an estimated 760 FICO credit score and an estimated 40 percent debt to income ratio. So with those settings, let's check out today's rates. About the same as it was yesterday. First up, our 30 year fix conventional for a primary home. The most common option people think of when they think of a mortgage. Rates coming in today, 6. 124. Final APR, 6. 427. Now, if there's any reason our customer doesn't qualify for a conventional option, we typically want to quote an FHA option to compare. FHA allows more leniency on credit issues and a higher debt to income ratio, but does require upfront and yearly mortgage insurance. Rates come in at 5. 25 when you add all the fees and mortgage insurance, finally PR 6. 205. So if our customer qualifies for both, they may consider FHA if they're willing to do the, uh, upfront and yearly mortgage insurance and our customers that need to use it. Definitely a very good option. The final APR is very comparable and our VA loans are only for our eligible vets and active service members. If you are eligible, these programs are definitely amazing. Notice here, the APR is very low. Rates as low as 5. 5 final APR with a standard funding fee comes in at 5. 798 definitely beats FHA or conventional or eligible vets and active service members. Definitely take advantage. And we'll scroll down here to the final standard program. USDA is only for USDA eligible areas. That's the rural areas of the country. If the property is eligible and the customer is eligible, these are great options to consider. USDA comes in at 5. 375 today. Final APR with all the fees 6. 113. So as usual, uh, squeaks out FHA by a touch in most areas. So definitely compare, uh, for our borrowers looking at FHA, want to compare the USDA and definitely speaks out conventional a little bit as well. So great option for those rule properties. And that rounds out the standard options that every bank has. Our customer doesn't qualify. Unfortunately, most banks have to deny them, but that's where we love to work with our 5, 000 plus programs, starting with our non QM alt doc option. So our customer doesn't qualify. Uh, for conventional or FHA using standard tax return documentation, you need to switch to alternative documentation such as bank statements, 1099s, uh, P& L programs, all kinds of different options. Rates today for bank statement are similar, comes in at 6. 25, family car, 6. 578. Just a touch above conventional, absolutely amazing, just switch to alternative docs. and nearly identical price. So great option for our borrowers that need that. And we have our non QM alt doc options for investment properties and tons of other options for investments we'll look at. So our bank statement or similar comes in today, 6. 999 for investment property, final APR 7. 415. So let's compare that to the other investment options. So there are no, uh, government programs, so no FHA, USDA, or VA, but we do have conventional. So conventional investment comes in at 6. 875 rate, final APR, 7. 211, which is beating our ALT DOF, which is typical, but not beating our favorite programs, our DSCR, stands for Debt Service Coverage Ratio. No income or employment information is needed. We simply use estimated rents from the appraisal to determine a DSCR value of 5, 000. The estimated rents cover the estimated expenses. That is a positive DSCR ratio, aka the property cash flows monthly. For a property with a positive cash flow ratio and a three year prepayment penalty, which is standard, rates come in today, 6. 499, on a legal R, 6. 809, beating conventional by quite a bit there. Absolutely amazing. And we can even add a five year prepay to some of our programs to sweeten the deal. Rates as low as 6. 375 today. Final APR 6. 682, beating conventional by quite a bit. And we also have a no prepayment penalty option as some states don't allow it and some customers don't want one. Final, uh, sorry, the rates start at, uh, 7%. Final APR 7. 298, just a touch above conventional, but I'd still say 100 percent of investors would choose a DSCR even if the cost is substantially more. And the final two options we always show here are 30 year fixed second mortgage. Great option now as many customers have a lower mortgage than what we're looking at here for their first mortgage, but still want to get some cash out. No problem. Use our 30 year fixed second mortgage instead of a HELOC as it is fixed and lower rates. For a primary home, we can get our fixed second mortgage, get cash out, rates as low as 8%, finally pay our 8. 370. And same program for investment properties. HELOCs are very rare for investments, so this is a great option. Right, so it's only 9. 375 to get cash out of that investment property without touching the first mortgage. Final APR is 9. 716. So those are some cool options. Let's go ahead and Switch to our topic for today, which is our P& L options. So when we do our non QM demo, we typically pull up the bank statement, which is the most common, uh, largest, uh, set of options there. But our P& L is probably, uh, probably second place, uh, Maybe there if the bank statement is an option. So first Jose, let's talk about why would you use P& L versus bank statement? And then let's check out the live rates. Good morning, everyone. Thank you for joining us for daily mortgage rates like what the mortgage calculator Uh, the the profit and loss loan is the solution when you have a bank statement loan Where there are unverifiable large deposits Declining, uh, deposit trends, declining income trends, uh, NSS overdrafts, basically anything that would be an issue, uh, when you're presenting the 12 months of bank statements, right? The P& L. Uh, most P& L programs do not require, uh, any bank statements. Some do require bank statements. So please do look at the, uh, guidelines, but, uh, it is the workaround for when you are having issues with your bank statement and obviously only for self employed borrowers. So let's share the examples we have for you today for our P& L options. Our first option here is at a 90 percent LTV, which is the maximum LTV. Uh, for all non QM loans and as with all non QM loans, never any mortgage insurance, even though we are above 80% loan to value, our lowest cost option here is 8.875 at 1.375 points, and our lowest rate option 8.375 at a cost of 2.375 points for a primary purchase. 90 percent LTV. Uh, for our investment properties, 85 percent LTV is the maximum LTV. 8. 874 is our lowest cost option at par. And you can buy that all the way to, down all the way to 7. 374 at a cost of 3. 25 points. And for our profit and loss primary cash out refi, 80 percent LTV is our maximum LTV under the P& L program for any cash out refis. 7. 875 is our lowest cost option at a quarter point. And you can buy that down all the way to 6. 875 at a cost of 2. 5 points. And now our profit and loss cash out for investment properties. Great news. Also 80 percent LTV. 7. 875 is our lowest cost option at a quarter point. And you can buy that down all the way to 6. 499 at a cost of 3. 25 points. And for our lower credit score borrowers, we do have 600 is our minimum credit score for this option. 75 percent LTV is possible for this primary cash out refi with a 600 score. 11. 125 is our lowest cost option at a cost of half a point and you can buy that down all the way to 10. 25 at a cost of 2. 375 points for our primary cash out refi with a 600 credit score. And our last option here is the investment. Profit and loss cash out again with a 600 credit score. 11. 125 is our lowest cost option at a quarter point cost. And you can buy that down all the way to 9. 75 at a cost of 3. 125 points. For our P& L cash out refi, 75 percent LTV with a 600 credit score, which is remarkable. So do look to the mortgage calculator for all your profit and loss loans, non QM, and agency. Alright, perfect. I do not see any questions. Go ahead and wrap it up here. Remember that we do this at 11 a. m Eastern every weekday where we go through our live rates and then we do a deep dive into a different loan type So we'll have a new loan type to talk about with you tomorrow. Thank you everybody for tuning in We'll see you tomorrow at 11 a. m. Eastern for the next episode of daily rates live with the mortgage calculator. Take care everyone