Daily Mortgage Rates LIVE - 10/15/2024 - CDFI No Income Verification Loans - Daily Mortgage Rates LIVE with The Mortgage Calculator

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Restream recording Oct 15, 2 (00:00):
So welcome everyone.

(00:00):
My name is Kyle Hiersche.
I'm the CEO.
Calculator joined here by ourpresident, Nick Hiersche and our
CSO, Jose Gonzalez.
We are a lender that specializesin non QM loans.
And what we do every weekday at11 a.
m.
Eastern on the show is gothrough our actual live mortgage
rates.
Then we do a deep dive into adifferent loan topic.
And today's topic is going to beCDFI, no income verification
loans.

(00:20):
So Jose will take us throughthat here shortly, but first
we'll go ahead and pull up therates.
So Nick, if you're ready, let'ssee what today's rates are
looking like.
All right.
So we will check out today'srates.
The date set is October 15th,just after 11 a.
m.
Eastern, so all our standardprograms have their initial

(00:41):
rates for today, and we'll setup a basic scenario to compare
the APR.
If you'd like a full breakdownand itemized loan estimate,
itemized all the fees that gointo the APR, please get with
our team members.
They would be happy to send thatover.
For our demo, we set up a basicscenario, a single family, uh,
home, 500 purchase price, 400,000 loan amount that corresponds

(01:01):
to 80 percent loan devalued, 20percent down payment.
That's it.
And we use an estimated 760 FICOcredit score and an estimated 40
percent debt to income ratio.
With those settings, let's goahead and Check out the rates
for today.
So first up is our 30 year fixedconventional option for a

(01:24):
primary home.
This is the most common optionpeople think of when they think
of a mortgage rates today comingin at 6.124.
Final A PR 6.427.
And if for any reason orcustomer doesn't qualify for a
conventional option, typicallywant to compare an FHA option.
FHA allows more leniency oncredit issues and a higher
overall debt to income ratio.

(01:44):
It does require upfront andyearly mortgage insurance.
FHA comes in at 5.
258.
Final cost of the APR with allthe mortgage insurance and costs
included is 6.
217.
So when we compare the APR,conventional could be a touch
more expensive.
So our customer that qualifiesfor both could consider FHA if
they're willing to do themortgage insurance.

(02:05):
And for customers that need touse FHA, definitely a great
option.
And our VA programs, only forour eligible vets and active
service members.
If you are eligible, these aregreat to consider.
Rates as low as 5.
624.
Finally, PR 5.
914 with a standard funding fee.
And notice the VA option isalways going to be cheaper than
FHA or conventional for oureligible VA borrowers.

(02:30):
And our final standard optionthat every banker lender has
access to here, USDA programs,only for properties in USDA
eligible areas.
So if the property is eligibleand our borrower is eligible,
these are great options tocompare.
USDA comes in at 5.
5 rate.
Final APR 6.
218.
So just like, uh, on Friday,usually USDA is a touch cheaper,

(02:52):
but it's almost identical to FHAat the moment, but usually you
want to consider, uh, USDA as atouch cheaper and is a touch
cheaper than conventional.
So definitely consider those forthose shopping in those areas.
And that rounds out the standardoptions that every banker and
lender has.
But if our customer doesn'tqualify, any banks or lenders
have to deny that customer.

(03:12):
We love to approve our customerswith programs such as our non QM
alternative docs.
So the customer doesn't qualifyfor conventional or FHA using
tax returns, et cetera, standarddocumentation.
We can switch to usingalternative docs like bank
statements, 1099s, P& Lprograms, asset related
programs, all kinds of differentoptions.
And the bank statement optionhere is coming in today, 6.

(03:35):
25 rate on APR with all feeshere 6.
578.
So that's pretty amazing.
Almost identical to conventionaltoday.
They use a non QM program, whichis amazing.
And now we'll check out ourinvestment options.
So first up here, our non QM altdoc option.
So bank statement or similar foran investment property rates

(03:57):
come in today, 6.
99, 6.
99, Final APR here, 7.
327, and we'll compare that toall our other investment
property options.
Tons of options here forinvestments.
First up, our conventional.
Remember, there are nogovernment options, so no FHA,
VA, or USDA, but we do haveconventional or investment

(04:18):
properties coming in today, 6.
875 rate, final APR 7.
1.
So it's cheaper than our AltDocby a touch, which is typical.
But not cheaper than ourfavorite option.
Our DSCR option stands for debtservice coverage ratio.
We don't need any income oremployment information from our
borrower.
We simply use the estimatedrents to determine a DSCR value.

(04:40):
The estimated rents can coverthe estimated expenses, aka the
property or cash flow monthly.
That's a DSCR ratio of one orhigher, which is preferred.
And this option here is with athree year prepayment penalty
coming in today at 6.
375 rate.
Final APR, 6.
707, much better thanconventional, which is amazing.

(05:00):
And we can add a five yearprepayment penalty to some of
our programs, uh, today, uh,it's actually about the same
rate here, 6.
375 rate, but notice APR is atouch cheaper, 6.
682.
And hopefully once the rates allupdate for today, we'll have
some other options as the fiveyear should be a touch lower.

(05:21):
And the final DSCR option wealways present is our no
prepayment penalty option, assome states don't allow it, and
some of our customers don't wantone.
Rates for no prepayment penaltycome in at 7%, final IPR 7.
298.
So that's higher thanconventional, which is typical,
but most investors still prefera DSCR option.

(05:42):
And our final two options hereare non QM second mortgage
options for our fixed ratesecond mortgages.
We did an episode on this lastweek.
Very cool options for ourcustomers that may have a first
mortgage that is lower than whatwe're Looking at here for all
the other options, but stillwant to access their Equity,
their cash out can get cash outof their primary home rates as

(06:04):
low as 8 percent as opposed to aHELOC.
That's a much lower rate andobviously fixed instead of
variable final APR is 8.
370.
So great option to get cash outof that primary home without
going into a HELOC program.
And same thing for ourinvestors.
We can use our fixed rate secondmortgage to get cash out of an
investment property as HELOCsare very rare for investments
anyway.

(06:24):
And still keep that firstmortgage rate as low as nine
point three seven five for thesecond mortgage I like our nine
point seven three one to getcash out of that investment
property So those are all of ourstandard options but today I'm
going to have jose Present onethat we definitely can't pull up

(06:46):
on our live price or demo.
This is a very unique program.
It's actually Technicallyillegal, right?
So this is a program that wouldotherwise be illegal for any
mortgage company to do But thereis a specific designation that
allows us to assist borrowersthat are in specific needs for
this type of program.
So, Jose, let's talk about firstwhy we can break the law here

(07:06):
and the specific borrowers thatwe're intending to help for this
program.
Good morning, everyone.
Thank you for joining us forDaily Mortgage Rates Live with
the Mortgage Calculator.
The CDFI program is actually adesignation granted by the
Department of Treasury.
Financial institutions to assistunderserved communities and

(07:28):
underserved borrowers.
Furthermore, if the borrower isAfrican American or Hispanic,
they are considered what'scalled CDFI eligible and get an
additional discount off of therate.
However, the CDFI program isopen to all borrowers, not just

(07:48):
CDFI eligible borrowers.
It is maximum 80 percent loan tovalue.
Uh, no income verification, nojob verification.
Uh, so they've, they've really,um, reduced the guidelines on
that respect, but again, 20percent down considerable amount

(08:09):
of reserves.
Uh, in some cases, as much as 12months of reserves are required.
Uh, this is, um, also, uh, forprimary and second homes.
And please note that the secondhome option does not have a loan
level price adjustment, samerate in LTV as the first.

(08:31):
Which is awesome because this isa great program for borrowers,
for example, looking to relocatefrom, uh, you know, what part of
the country to the other, theyhaven't yet accepted that job.
They want to have the placewhere they're going to live
first.
Then they can, uh, calmly acceptthe job that they want.
Or for example, they have tosell their existing home, but

(08:53):
they want to close.
On the new home first and sellthe existing home, uh, calmly
and not rush and maybe losemoney.
So those are two very goodexamples where we can use this
product.
So let me go ahead and share myoptions with you today.
First example here at themaximum, uh, 80% LTV, uh, 20%

(09:18):
down, uh, is the minimum downpayment.
Uh, seven 20 plus credit scoreis required for the 20% down
option, and you're looking at8.875 at a cost of 1.75 points.
Uh, there are lower buy downamounts than 1.75 points, but

(09:39):
they will result in a higherrate.
Our next option here is for thecredit tier 680 to 719.
And this credit tier, it is 25percent down minimum.
You're looking at 8.
5 percent rate at the same costof 1.
75.

(09:59):
I kept 1.
75 as the cost across the boardso we could compare the rate.
And now at our lowest credittier, which is six 60 to 6 79,
30 5% down is the minimum downpayment.
9.125 is the rate at the cost of1.75 points, and now some cash

(10:26):
out refis.
This program does allow cash outrefis, but as you can see they
do restrict it a little bit more'cause they're really more about
home ownership in the purchaseside.
But here, uh, with a 740 pluscredit score, 740 is the minimum
credit score to be able toattain 70 percent LTV on the

(10:46):
cashout 8.
875 is the rate at a cost of 1.
75 points.
And our next cash out option isat the next credit tier.
In this case, 700 to 739 willget you 65 percent LTV on this

(11:07):
cash out refi for your primaryand second home.
8.
25 is the rate at 1.
75 points.
And our last example here is ourcash out refi at the 660 to 699
credit tier.
That is the lowest credit tierfor this product, for the cash

(11:30):
out refi.
60 percent LTV is the maximumLTV available at that credit
tier.
8.
875 is the rate.
At a cost of 1.
75 points.
So some amazing examples herefor this no income verification
loan for primary and secondhomes as high as 80 percent LTV.

(11:59):
All right, very interesting andamazing program there.
I don't see any questions comingin, uh, so I think we'll go
ahead and wrap it up.
Jose, do you have any moreexamples of, of situations this
might be, uh, good to use in?
Yeah, I mean, we had, uh, anexecutive, uh, that was being

(12:20):
paid with stock options thatwere going to mature in the, you
know, not too far off future.
But they really wanted to buythis really nice house, about 1.
4 million.
And they didn't want to selltheir current house.
Uh, he, but, uh, in this case,uh, his credit was a little
challenged, but the wife had aseven 60 credit.

(12:44):
Uh, so we basically structuredthe transaction of the new home.
Under the wife, um, closed onit.
And then after they closed onthe new 1.
4 million home, then they putthe other home for sale.
And this was all due to the factthat he was getting paid in
stock options, that he weregoing to mature.

(13:06):
He didn't have any kind ofincome at all.
And in his case, he also had lowcredit.
So we used the wife that didn'teven have a job, but had amazing
credit.
I know also in, in terms of, uh,like crypto type people, right.
Yep.
Uh, we've, uh, Nick has financeda few of those crypto type
borrowers where they have, uh,you know, plenty of crypto

(13:29):
assets, uh, just no income thatthey're declaring.
So, you know, as long as youhave for the 20 percent down and
the anywhere from nine to 12months reserves that's required,
depending on your credit score,you're good to go.
Obviously you need the creditscore as well, but most of the
crypto borrowers had no issuewith the credit.
The only issue they had was theywere not reporting any income on

(13:52):
the 1040.
All right, great.
All right, I still don't see anyquestions.
So we'll go ahead and wrap it upDefinitely appreciate everybody
tuning in remember that we dothis at 11 a.
m Eastern every weekday where wego through the live rates and
then a different loan topic Sowe'll be back tomorrow with a
new topic.
We'll see you tomorrow 11 a.
m Eastern for the next episodeof daily rates live with the

(14:13):
mortgage calculator

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Daily Mortgage Rates LIVE - 10/15/2024 - CDFI No Income Verification Loans

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