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donnybendo3206 · Joined: 02 Apr 2009 Posts: 2 2.11 Dollars($)

I was given a interest quote of 4.75% for a refinance of my 3 unit building. The mortgage company said there was a 1 point charge for 3 unit buildings and a 1.75 point charge for investment property. I live in one of the units and rent out the other two. Is there any way to get them to not consider this investment property. If I qualify for the loan without them considering the rents could I get around the 1.75 point charge for investment property?

JKennedySLG · Posted: Thu Apr 02, 2009 9:25 am Post subject:

If you live in one of the units within this property, this is not an Investment Property. We would consider this an Owner Occupied Primary Residence. There should be no additional charges for "Investment". The rents you collect from the other units are considered as income for you based on 75% of the gross rental amount. I hope this helps....

gmakerley · Posted: Thu Apr 02, 2009 9:54 am Post subject:

james is absolutely correct. what kind of lender gave you a quote of 1.75 points for investment property? be careful, donny.

Guest

Hi,

Thanks. I refinanced this loan a couple of times over the last 10 years and never had points added on for an investment property. The guy said there going by Fannie Mae rules and starting April 1 they charge 1.75 points. Do they have different rules? If thats the case could I get around it by not using the rental income to qualify? Also he said the rate would be 5.325% if I didn't want to pay the points upfront. My current rate is 7.375% so I still would be saving about $1000 a month. Thanks!

Donny

gmakerley · Posted: Thu Apr 02, 2009 12:16 pm Post subject:

the guy is giving you wrong information. there is, truly, an adjustment of 1.75 points for investor loans. however, yours is an owner-occupied property. there is no adjustment for owner-occupied properties.

i'd guess you're refinancing at 75% ltv or less. you will definitely see a 1 point adjustment for the 3-family - that's true. your credit score must be stellar because you didn't mention any adjustments there.

my guess? he's charging you 1.75% in discount points so as to make a few dollars on the loan. now that's perfectly okay, because we all need to get paid, after all. but to paint it as an adjustment where there is none is plain wrong.

i don't begrudge the guy his 1.75% overage, if that's what his plan is; but i do take issue with telling you something entirely different. it seems he is ashamed to tell you that's he will make money on this deal. it's a common syndrome, though, i think.

one of our problems is that the public has been brainwashed to believe that all mortgages should come with zero points. unfortunately, if that were the case, all loan officers would starve; since points contribute to our efforts to make a living. just like everyone else does.

Guest

Thanks,

My loan is going through my credit union and I have a credit score of 770. The ltv on the property is under 75% on this mortgage. I do also have a HELOC with them. Do they use this also to calculate the ltv or do they just use the 1st mortgage? If they use both it might be a little over 75% depending on the appraisal. Thanks for all your answers it is really helping me understand this process better.

Donny

gmakerley · Posted: Thu Apr 02, 2009 12:49 pm Post subject:

the credit union? it's not in their blood to charge people extra (i used to work as a lending manager in a credit union). you don't want to go over 75%, because then he'll try to add 3 points instead of 1.75.

something tells me he's simply making a mistake - a costly one if you don't get it rectified, though. your heloc will calculate into your cltv (combined loan to value), and that is apparently not an issue in this case.

maybe he is just a misguided soul who thinks that since you obtain rental income from the property it has to be considered as an investment. in any event, he is wrong.

Posted: Thu Apr 02, 2009 1:06 pm Post subject:

I would have to agree with George 100%. Great Post.

If you can not get anywhere with the individual your dealing with, you have to do what is in your best interests. Whether you present this person with the information we have provided you or with contacting another local lender to compare options. Good Luck!!

JKennedySLG · Posted: Thu Apr 02, 2009 1:08 pm Post subject:

That was me posting as Guest. My apologies, I thought I had been signed in.

SPRING WEATHER IN NJ FINALLY!!

Guest

HI,

Just got email from the loan officer and it said:Per fannie mae guidelines as of January 1,2009, they have imposed new add-on fees to loans that will be sold to fannie mae. Fannie mae imposes these add-ons fees to units even if it is your primary residence.

I know there's a point for a 3 unit building, but is there new rules for how to determine owner occupied or investment property loans?

Thanks for all the help.

Donny

gmakerley · Posted: Fri Apr 03, 2009 11:04 am Post subject:

what i don't understand is, as a fannie mae lender, our pricing here is not reflecting this 1.75 add-on for multi-family. now, based on the posts i have seen here, it appears to me that the ltv in this case is 75% or less. i hope you'll correct me if that's wrong, donny.
pricing on such a loan, for an owner-occupied 3-family would have the following add-ons: 1.00 for the 3-units and .5 for credit score between 680-719; 1.00 between 680-699; 2.0 between 660-679; and so on. i see no mention earlier of scores, so i'll stop there.

there is NO/ZERO/NOT ANY add-on for an owner-occupied 3 family except as i have noted above.

once again, i have to surmise that your loan officer is either misguided or is working with some kind of weird investor. for a fannie mae loan to be written as i have described it and for another fannie mae loan to be written as you've described it is nonsense. fannie mae isn't going to charge less because i'm the originator and more because the credit union is the originator.

i fail to comprehend where this 1.75 comes from. why don't you ask your loan officer to give you a copy of the fannie mae letter that reflects this major change? and if he protests, tell him that you can look up things on efanniemae.com just as well as he can.

honestly, donny...this just doesn't make sense.

donnybendo3206 · Joined: 02 Apr 2009 Posts: 2 2.11 Dollars($)

Thanks for your help.

I just seem to be going back and forth with this loan officer. I understand all the add ons that are there, but I just can't understand why he insists this is an investor loan and thus the 1.75 point charge. I asked for information of where he gets this and he gave me the link to the fannie mae website. Am I wrong to ask for a specific announcement from him to clarify this investor loan/owner occupied loan distinction? Sorry for all the posts and questions. I'm just getting frustrated with this.

Thanks,
Donny

Jessica · Posted: Sat Apr 04, 2009 9:50 am Post subject:

Hi all,

Let me just chime in. First of all, I'm not a lender and as such I won't be able to tell you about the pricing stuffs and all Donny. But what seems fishy here is the credit union telling you it'll charge you 1.75 points just because yours is an investment property. But actually, it's not an investment property. Yours is an owner occupied primary residence because you actually stay in one of the units. An investment property is more of one which you rent out entirely.

Secondly, the credit union comes up with a weird explanation that it's a Fannie Mae rule for an investment property. Looks like your loan officer is misguided or if not so, then surely he wants to earn a few dollars but as George said, there's nothing wrong if a lender or a loan officer earns dollars through loan points. I mean it's after all a business, isn't it? So, the credit union could have just made it clear that it needs you to pay some more points.

gmakerley · Posted: Sat Apr 04, 2009 11:20 am Post subject:

jessica, i agree with your overall premise - donny ought to look around to comparison shop. i disagree with the thought that his loan officer providing him with the fannie mae website is wrong. there's nothing wrong with that - i suspect the loan officer is thinking "he doesn't believe me, so let me give him the direct link and he can see for himself."

of course, giving a borrower that link doesn't make the bad information so. there is no doubt that there is a 1.75 adjustment for investment properties, but donny's is not an investment property. i used "misguided" for the loan officer, because i'm trying to be charitable. as i noted, if what he's trying to do is hide his income by calling it something else, that's just stupid - since he'll get caught.

donny...please, at least, discuss this with other lenders.

Guest

Thanks to all of the help here I was finally able to get the investor loan status dropped on my refinance saving me the 1.75 point add on. Thanks for all your guys' help!! One last question is, are there any other add ons in relation to the ltv on the refinance. My credit score is 769. Thanks again.

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