MORTGAGE MARKET PROOF PRODUCTS

MORTGAGE MARKET PROOF PRODUCTS

Mortgages for ANY market.

By Richard Le on March 1st 2021

There are only 4 dials to turn.

A mortgage loan can seem complicated and elusive to the average person. If you look at what a mortgage loan is at its core, it’s an investment that a person or institution makes in you in order for them to make money!

Since this is the case you have to understand that qualifying for a loan and the prices you get, are all based around risk assessment. Will I get my money back? Will I make a profit? Will this guy/gal just decide not to even pay me back?

These are the questions that investors are asking when assessing whether to give you a loan or not.

The higher the risk they perceive, the more expensive it will be assuming they are even willing to take on that risk… The lower the risk however, the better the products and prices that become available.

There are only 4 major things that any lender will look at for any loan product when analyzing your situation.

4 "dials" you must turn to "unlock" approval for any loan. It's incredibly simple when you boil it down to just these 4 things.

Just remember PICA (pai·kuh):

Property
Income
Credit
Assets

Some products will look at some of these categories and weigh them more heavily than others. For example, some products will only care about your equity position in the property and your credit score. Others might only care about your income and credit score and let you finance 100% of the home.

So whether it be a traditional FHA, VA, conventional loan OR a non traditional loan (Non-QM), understand that different lenders will take different risks and offer different products to provide flexibility to a wider range of clients.

Here is a wide range of products that would help most people in any market rate environment.

Home Equity Lines of Credit (HELOC) / Home Equity Loan (HELOAN)
Bank Statement Loans (Self Employed)
DSCR Loan (Investment Homes)
Stated Income (Primary and Secondary Homes)
Hard Money (Business related and Investment Homes)
Cash Out Refinance (Primary, Secondary, Investment Homes)
Purchase Loans (Primary, Secondary, Investment Homes)

Home Equity Lines of Credit (HELOC) / Home Equity Loan (HELOAN)

Many people need access to cash but are afraid to cash out refinance because they secured a low rate during the “Covid refi boom” of 2020/2021. For people looking for capital to invest, renovate their homes, or pay off debt… a HELOC or HELOAN is a great alternative.

A HELOC works almost exactly like a giant credit card except it uses your home as collateral. A HELOAN is a second mortgage similar to a standard first mortgage, you get a lump sum and a set term to pay back the loan.

In either case these are great products because they offer access to the dormant asset we call equity, and gives you the ability to leverage it without selling your home or refinancing your primary mortgage. And since this product is usually a smaller balance, fluctuation in rates don’t affect the payments as viciously as it might on a bigger first mortgage.

PICA - This focuses on all four (property, income, credit, assets)

Bank Statement Loans (Self Employed)

Being in business is tough. A lot of self employed individuals have a lot of business expenses that they can legitimately write off, so when they file their tax returns it would appear as though they don’t make any money. However a bank statement loan looks at actual deposits for the last 12-24 months to determine what revenue truly looks like. This is a good loan for someone who is self employed and doesn’t qualify through the traditional route and wants an opportunity to purchase or refinance a home.

PICA - This focuses on 3 out of four (assets, property, and credit)

DSCR Loan (Investment Homes)

Investors are constantly on the lookout to acquire more properties. Often what limits investors from building their real estate empires is their income. Traditional loans have a debt to income ratio cap which can be quite limiting to an investor. A DSCR loan looks at the individual rental income of the property to qualify rather than the income of the client. This is an amazing product for investors looking to build their real estate portfolios with little to no limitation.

PICA - This focuses on three out of four (property, credit, and assets)

Stated Income (Primary and Secondary Homes)

People might be starting a new chapter in their lives. Maybe they’re starting a business, just retired, or they have irregular income for whatever reason, but they would like to own a home.

Stated income as the name suggests allows you to qualify for a loan without verifying your income. A great alternative for someone who is self-employed, retired, real estate investor, new business owner, recent immigration, has volatile or irregular income, etc.

PICA - This focuses three out of four (property, credit, and assets)

Hard Money

These loans are typically short term and mostly look at your equity position to be able to give you the money. If you have a strong equity position or a big down payment there’s a good chance you’ll be able to get this loan.

PICA - This focuses two out of four (property and credit)

Cash Out Refinance for: Debt Consolidation, Home Improvement, Solar, Investing

Would you rather have a low rate and pay $1000 more per month on your monthly obligations? Or would you rather take a higher rate and save $1000 per month? Sometimes the best move is to actually cash out, refinance and consolidate all of your debt. My accountant says it all the time, “Sometimes the cheapest thing to do is to just pay the taxes.” So let me tell you, a higher rate with all your debt consolidated might be the cheapest thing to do.

Cashing out for home improvement or to invest in a solar system might also make sense if the return on investment is greater than the increase in rate. How much would you be saving on electricity? It just comes down to math.

I met a real estate investor who would buy mobile home parks with credit cards. He told me, “I don’t care what my rate or costs are as long as I make my minimum profits.”

Wealthy people think in terms of cash flow and tangible benefits, not in terms of getting a good rate, saving and budgeting their way to wealth and financial freedom.

PICA - This focuses on all four (property, income, credit, assets)

Purchase Loans

Whether you’re trying to buy your first home or upgrade from your first home… Maybe you’re retired and trying to downgrade into a smaller home… Or maybe you’re looking to buy a vacation or investment home…

Purchase loans are always needed. When doing a purchase on a new home you want to ensure you are working with a loan officer who KNOWS what they are doing and who can process your loan quickly.

Nothing is more stressful than being in the home buying process and having a loan officer or lender who takes forever to communicate, forever to process the loan, and makes the home buying process incredibly stressful.

PICA - This focuses on all four (property, income, credit, assets)

Richard Le

Richard Le helps people build their dream home and invest into real estate. He is an expert in credit and mortgage lending and has been helping people build passive income by helping them build their real estate portfolio. If you're interested in building your own real estate portfolio then definitely reach out and book a call today.

Richard Le

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