ARMs; Asset Depletion Loans; Debt Service Coverage Loans; Mixed Use Properties
Here are a few quick mortgage reminders/updates:
I. JUMBO ARMs REMAIN VERY LOW.
I mentioned yesterday that our Jumbo 30-Year rates are as low as ever, but our JUMBO ARMs are even lower. Our 7/1 ARMs, for example, remain in mid-3%range for no-points loans for qualified borrowers.
II.ASSET DEPLETION LOANS.
These are the perfect option for buyers with a lot of liquid assets but too little verifiable income on tax returns. We simply amortize all of a borrower’s liquid assets over a fixed period to come up with an income figure. We can include other income sources too. There are a few rules/caveats though:
(1) we can only use assets that will remain after the loan closes – we have to subtract down payment, closing costs, etc.;
(2) we can only use 60% of retirement assets and 70% of stocks not in retirement accounts;
(3) we amortize assets over 120 months; and
(4) we need at least 20% down. The rates are in the 6% range, much higher than conforming rates but far better than “hard money.”
A borrower with $1 million in assets after the discounting and subtracting might qualify for about a $500,000 loan.
III.DEBT SERVICE COVERAGE LOANS.
These are also great loans for borrowers with limited verifiable income. We can use the rental income on the property to qualify a borrower, as long as there is enough rental income to sufficiently offset mortgage payments. These loans require 20% to 30% down too, depending on the amount of rental income and on the borrower’s “landlord history” (no history requires a minimum of 30% down). The rates are also in the 6% range.
IV. MIXED-USE PROPERTIES.
We now have financing available for properties with both residential and commercial uses, e.g. retail on the ground floor, and residential on the upper floors.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646