Daily Mortgage Rates LIVE - 09/25/2024 - 1099 Loans - Daily Mortgage Rates LIVE with The Mortgage Calculator

Episode Transcript
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Restream recording Sep (00:00):
Welcome everyone.
My name is Kyle Hiersche.
I'm the COO of the MortgageCalculator joined here by our
President Nick Hiersche and ourCSO Jose Gonzalez.
We are a lender that specializesin non QM loans and what we do
every weekday at 11 a.
m.
Eastern on this show is gothrough our actual live mortgage
rates.
Then we do a deep dive into adifferent loan type and today's
loan type is something we'revery familiar with here because
we specialize in non QM loanswhich is 1099.

(00:21):
So Jose will take us through adeep dive into that but first
We'll check out our rates.
So Nick, if you're ready, let'sgo ahead and pull up today's
rates and see what they arelooking like.
Right.
Not much has, uh, changed.
It looks like, but that's goodbecause we're still at one and a
half year lows here, we willcompare all of our standard

(00:42):
programs for today, September25th.
It's just after 11 a.
m.
Eastern.
So all our initial rate sheetsare live for our programs here.
And we will compare the APR.
If you'd like a full breakdown,an itemized loan estimate has
all the fees that go into theAPR.
Please get with our teammembers.
We have over 300 loan officersthat would be happy to help you
out.
For the demo, as we do everyday, we'll set up a standard

(01:03):
scenario so we can compare allthe programs.
We'll set up a single familyhome, set up a 500, 000
purchase, 400, 000 loan amountthat corresponds to 80 percent
loan, 20 percent down payment.
And we use an estimated creditscore of 760 and an estimated
debt to income ratio of 40%.
So with those settings, let'scheck out the rates today.

(01:27):
Oops, showing a little too muchthere.
So first up for today is our 30year fixed conventional for
primary home.
It's typically the first optionmost people think of when they
think of a mortgage.
Rates today coming in at 5.
625, final APR 5.
927, and if for any reason ourcustomer doesn't qualify for a
conventional option, wetypically want to quote an FHA

(01:49):
option, FHA allows moreintegrity on credit issues, as
well as a much higher overalldebt to income ratio.
But does require a front endyearly mortgage insurance.
FHA comes in today, 4.
875 with all the fees andmortgage insurance.
APR comes in 5.
829.
So a touch cheaper thanconventional.
If our customer qualifies forboth and if our customer needs

(02:10):
to use FHA, definitely a greatoption.
And our VA is only for eligiblevets and active service members.
If you are eligible, theseprograms are amazing rates as
low as 5.
125 today.
Final APR with a standardfunding fee 5.
379.
So when we're comparing acrossthe other alternative programs,
the VA is always going to be thebest for our eligible borrowers.

(02:31):
So definitely take advantage.
And our final standard program,USDA is only for USDA eligible
areas.
That's the rural areas of thecountry.
The property is eligible.
The borrower's eligible.
These are great options to lookat.
4.
99 rate final APR with all thefees.
It's 5.
705.
So if our customer is comparingthat to an FHA, USDA is going to

(02:52):
be a touch cheaper and a touchcheaper than conventional as
well.
So great option in those ruralareas.
Now those are the standardoptions that any bank or lender
has, but if our customer doesn'tqualify, many banks or lenders
don't have other options.
That's where we step in with our5, 000 additional programs.
First up, our non QM Altdoc forprimary home.

(03:13):
And if our customer doesn'tqualify using conventional docs
such as two years tax returntypical documentation needs to
use alternatives We can switchhere.
We can use bank statements 1099sasset related P& Ls all kinds of
different options rates todayfor bank statement lowest 6
percent finally PR 6.
2 9 7 very close toconventional.

(03:35):
We're within about 0.
3 today, which is pretty amazingUsually within about 0.
5 of conventional, but uh, justto switch to alternative docs,
very comparable price there.
And for our investors that needto use alternative docs, we have
tons of options.
So first up here is our non QMalt doc option.
So again, bank statement orsimilar, coming in at 6.

(03:56):
5 rate, final APR 6.
823.
And we'll compare that to ourother investment property
options.
First off, our conventionaloption.
We don't have any governmentoptions for investments, so no
USDA, FHA, or VA, butconventional comes in today, 6.
25 rate, finally got a 6.
581, which beats non QM, AltDoc, which is typical, but

(04:19):
doesn't quite beat our favoriteprogram coming in smoking today,
DSCR, dropped quite a bit fromyesterday, coming in today with
a three year prepayment penalty,DSCR stands for debt service
coverage ratio, no incomeinformation needed, no
employment information needed.
We simply use the estimatedrents from the appraisal to
determine a DSCR ratio thatrents from the appraisal can
cover the estimated expenses.

(04:41):
That's a ratio of one or higher,AKA the property cash flows.
That's what is preferred.
So this option with a three yearprepay comes in today 6.
125, quite a big difference fromyesterday.
Final APR 6.
450, beating conventional again,amazing.
And we can sweeten the deal witha five-year prepay Some of our
programs allow comes in today ata smoke in 5.875 rate for DSCR

(05:04):
with five-year prepay final A PR6.169.
Again being conventional amazingand our no prepayment penalty
option about the same as it wasbefore.
Rates come in today at 6.5 finalA PR 6.823 for our states that
don't allow it and our investorsthat don't want it, it's a touch
higher than conventional, butalways preferred for our

(05:26):
investors.
To use a DSCR loan, especiallywhen the cost is very comparable
and the final two options Wealways go over very popular
products 30 year fixed secondmortgages as an alternative to a
HELOC which is typically theonly way to get a Second
mortgage to get cash out and nottouch the first mortgage But
these products are amazing for aprimary home comes in today 8.

(05:48):
125 Final APR 8.
527 to get cash out of a primaryhome without touching that first
mortgage You And these are nonQM programs, so we can use bank
statements and similar.
And for an investment property,get cash out without touching
that first mortgage with a fixedrate second mortgage, much lower
than a HELOC, coming in today at9.
25.
Probably be our 9.

(06:09):
542 to get that cash out for ourinvestors.
Now let's go ahead and switch intoday's topic.
So when we do our non QM AltDocdemo, again, bank statements
always the typical option.
That's the most common optionand typically the lowest priced
option.
But as we went over yesterday,we have BNLs, we have all kinds

(06:30):
of different variations, andtoday's variation is 1099.
Pretty straightforward, butJose, let's talk about why we
would use 1099 as opposed to thestandard bank statement option.
And then let's actually checkout some examples since we do
the live demo, we don't get toactually check out the 1099
specific option.
Sure.
Good morning, everybody.
Thank you for joining us forDaily Mortgage Race Live with

(06:50):
the Mortgage Calculator.
Uh, 1099 and Bank Statement, uh,income streams are both for self
employed borrowers.
The main difference is that the1099 loan allows us to use 90%.
of the face value of the 1099.
Only a 10 percent expense factorautomatically worked into the
system.

(07:12):
Whereas bank statements, uh,the, the expense factor can be
anywhere from, uh, you know, 20percent to, you know, 50 or 60
percent depending on the incometype.
So, uh, you're definitely goingto always get a larger
percentage of the income fromthe 1099 than you will from the

(07:35):
bank statement.
However, the borrower actuallyhas to receive a 1099 and be
aware that there may besituations 1099s ought to come
from one company and others mayallow it to be from different
companies.
So do look into that.
So let's get right into our, uh,options for this morning.

(08:01):
First option is for a 10 99primary purchase.
As always, 10%, uh, 90%, excuseme, or 10% is the minimum down
payment, 90% maximum LTV forany, uh, non Q1 product.
And in this scenario here, 8.5%is our lowest cost option at a
cost of seven, uh, 0.75.

(08:24):
And 7.625 is our lowest rateoption at a cost of 2.375.
That is for our primary purchasewith only 10% down.
Now our investment purchase,minimum down payment is 15%, 85%
LTV, which is pretty amazing foran investment property when

(08:44):
we're using 10 90 nines.
To qualify the borrower, 8.749is our lowest cost option at
par.
And you can buy this down allthe way to 7.
249 percent at a cost of 3.
375 points.
And then for our low creditscore borrowers, 600 is the

(09:06):
minimum credit score for thisproduct, 1099 product.
80 percent LTV is the maximumLTV when you are at a 600 credit
score.
10.
875 is our lowest cost option atpar.
and you can buy that down allthe way to 9.
75 at a cost of 2.

(09:27):
375 points.
So now for our primary cash out,uh, 80 percent LTV is the
maximum for a cash out using1099s.
For primary 7.
75, lowest cost option at par.
And you can buy that down to 6.

(09:49):
375 at a cost of 2.
375 points.
And for our investment propertycash out, great news, 80 percent
LTV is also the maximum LTV, 7.
749 at par.
And you can buy that all the wayto 6.
624 at a cost of 3.

(10:10):
25 points.
And our last option is our lowcredit score cash out refi.
Great news 75 percent LTV cashout is possible using 1099s with
a 600 credit score.
11.
125 is our lowest cost optioncosting 0.
25 points.

(10:31):
And you can buy that down allthe way to 10.
125 costing.
2.
375 points.
So look to the mortgagecalculator for all your 1099 and
non QM and agency loan options.
All right.
Oh, it looks like we do have aquestion that just came in.

(10:52):
Feel free to drop any questionsthere.
First question is how many years1099 is required for the 90
percent LTV primary purchase?
Well, that's a very goodquestion.
And the answer to that questionwould depend on what they were
doing before they became.
Self employed borrower with a1099 if they were in the same

(11:12):
field like if they were a doctorWorking as an employee for a
hospital and now they decided togo the 1099 route as long as you
had 12 months of 1099, you'd beokay.
You could document the 1099income for the last 12 months.
That's going to be the same ifyou were in a previous position
doing the similar job,especially if you had a license

(11:34):
for it.
Like if you were an electricianand now you're a self employed
electrician.
Maybe you're an electrician witha license working for a company,
now you're doing it on your own.
Again, you would only need tohave a 12 month history of
receiving the 1099, as opposedto the usual 2 year history
because your prior experience inthe same field, doing the same
duties, will count, uh, forpurposes of qualifying you for

(11:59):
the loan.
So basically two years, but if,if they were in the same
business that previous year,that same business, same job
type, uh, usually they like itto be, if you were in a job type
that required some type oflicense or certification.

(12:19):
I don't see any other questions,so I think we can wrap it up,
but absolutely great programthere.
And definitely for loan officersout there, make sure you're
paying attention to your borrow.
When you're talking about bankstatements, if it's mostly
coming from a 1099, this isdefinitely something to be aware
of, and you're going to capturemore income for sure.
So with that being said, we'llgo ahead and wrap it up here for

(12:40):
today.
Remember that we do this show at11 a.
m.
Eastern every weekday, where wego through our live rates and
then do a deep dive into adifferent loan type.
So we'll have a new loan typefor you tomorrow.
Appreciate everybody tuning in.
We'll see you tomorrow 11 a.
m.
Eastern for the next episode ofdaily rates live with the
mortgage calculator Have a greatday, everyone

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Daily Mortgage Rates LIVE - 09/25/2024 - 1099 Loans

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