JVM Lending Blog

Rates Marginally Higher Again; 6 Months Seasoning for Cash-Out; Hard Money

30 Year Fixed Rate Loan at a Cost of One Point: 5.125%*

Rates increased slightly again. It looks like we might be back in the “5’s” to stay. We had a client complain about her “really high rate” yesterday after we locked her Investment Property loan in the mid 5’s. She was good natured and we took it in stride, but we did point out that her “investment property” rate was about 3% lower than the owner occupied rates we quoted throughout most of the 1990s. Our point once again is that even though rates are higher than they were in May, they remain extremely low by historical standards.

For those of you paying cash for properties (owner occupied or non-owner occupied), remember that the properties need to “season” six months before you can pull cash out, or before you can get a loan against the property at all. We are referring to competitive Fannie Mae loans. We still have “hard money” sources that have no seasoning requirements.

Our Hard Money sources have rates in the 10.5 to 11% range; they charge from 4 to 5 Points; and their loan-to-value limits are 70% to 75%. After October, however, because of new regulations, it will be very difficult to get hard money loans against Owner Occupied properties. The new Fee and Annual Percentage Rate limitations for owner occupied residences make it almost impossible for Hard Money lenders to comply with the law in most cases. The new rules do not apply to investment properties.

*The above rate quote has the following assumptions: $400,000 Loan Amount; 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is approximately 0.20% higher than quoted rate for a $400,000 loan. Estimated closing costs affecting the APR include $4,595 for Origination and Processing Fees, $850 for other Lender Fees; $1,400 for Escrow Fees, and $1,000 for Prepaid Interest.

Call Jay Voorhees or Heejin Kim at (925) 855-4491

Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646