Multiple loans

Things to Consider to help you qualify for multiple “Full Doc” loans; or even just one more “Full Doc” loan before having to pursue “Stated Income” loans:

30-year Mortgages: Always get a 30-Year Mortgage. 30 Year mortgages will show on paper a lower monthly debt service payment than a 25, 20 or 15 year mortgage. Most people have a coronary when they look at the “Truth in Lending” form in a loan document package. This is the form where your total financing costs are spelled out for you in black and white. Smart people, however, realize that these are the costs ONLY if you stay in that particular property or loan for its complete term. Who does THAT anymore? Just look at this as a "cost of doing business."

If you must pay off your mortgage within a certain time frame, such as 15 years, than take out a 30-year mortgage and make a 15-year payment. By doing so, your mortgage will be paid off in 15 years, yet on your credit report, you will be underwritten based on a 30-year payment, thus qualifying for more financing. The additional payment on a 15-year mortgage may result in you not qualifying for your next Full Doc loan.

If you currently have 15, 20, or 25-year mortgages, or 2^nd mortgages, consider refinancing them into 30 year mortgages. You will have to gauge the expediency in this, by analyzing your break-even period with your holding period for the property in question, along with exactly how many more loans you can qualify for “Full Doc” before you have to pursue a “Stated Loan.” Remember, many times taking a small hit will pay larger dividends in the transactions to come.

Installment Loans:

Just like a mortgage, always finance your automobiles and recreational vehicles over a maximum loan (60 or 72 months) period for all of the same reasons noted above. Remember, you can always make a higher payment to pay off your loan in a shorter amount of time.

Credit Cards in relation to Mortgage loans:

Select the credit cards with the lowest monthly payment options. These recommendations will not only allow you to qualify for more financing, but they also run in concert with a very simple and very basic financial planning strategy:

“Put your dollar to work where it will work the hardest for you”

Why pay the additional $100 a month to a 15-yr 6% tax deductible mortgage when you should elect a 30-year mortgage and apply the $100 savings to your 8% non-tax deductible credit cards; or even apply the same to cash purchases you would normally charge to your 8% non-tax deductible credit card.

A note about longer amortization versus interest-only or Interest-first loans

When given the choice, the most conservative investor will be putting some money down on any purchase. The trick is to find that balance between the amount the lender requires in order to get the best rate, what your personal finances will support, and your holding strategy for the property.

Down payment money is purchased equity. It is also money tied-up. This is the balancing act. You want to put as little as possible into a deal, but you have to balance it with how much you have overall, how long it will be tied up, and the realities of whether the property will appreciate in an acceptable manner, or, if not, how much equity you have to buy to protect yourself. If you are confident in your prediction of the appreciation curve, by all means get an interest only loan (you’ll pay about 1/4 percent in rate to get it – so do the math and see if it makes sense to you.) Otherwise, always take out a 30-year mortgage, or even longer, and if possible or warranted, elect an interest only option.

In an appreciating market, why bother paying principal in a mortgage when you are paying such a low, and in many cases a tax deductible rate. On a typical 15 or 30-year mortgage, your payment is mostly interest for the first 5-yrs. Very little goes to principal. If you are an investor, your primary residence is nothing more than an investment you happen to reside in. When your home appreciates to maximum level (5-7 years) in most cases, then you will sell your home for a profit and buy another home in an area appreciating at a rate higher than the home you are currently living in. Your equity (Profit) will come in the form of appreciation and not principal reductions. It’s up to you to gauge the ability of the subject property to appreciate appropriately.

Many lenders are finding it easy to sell mortgage terms that are LONGER than 30 years, and indeed, FNMA (Fannie Mae) has recently introduced a 50 year term. They view this as a better risk for you than interest-only. Consider it, if your heart can take the Truth In Lending form…

Mortgages for any less than 30 years are “Old School”. When you are building your wealth, leverage your dollar to the fullest extent. Once you become wealthy, focus on net holdings. By then you’ll have the ability to pay cash for that 100-unit apartment building or office complex that will generate $100,000 a year in net rental income. Until then, put your dollar to work for you.

We invest countless hours in educating and assisting our R.E. Investor Clients in developing a strong Credit Profile. This is part of our investment into our Clients. This insures top tier loan programs and multiple transactions for our clients, which results in additional transactions for our office. With our low pricing schedules, we do not become profitable until you are funding multiple transactions. You will not qualify for multiple transactions unless you are willing to commit to improving your overall credit and debt structure.