Does spouse income need to be earned or can it be unearned/passive in order to qualify?
Using passive income to qualify for a loan is acceptable assuming it’s enough to offset the individual’s monthly liabilities (found exclusively on their credit report), and we have a 2 year history of this type of income. On a case by case basis only 1 year history might be considered.
How long does prequalification take?
Typically 24-48 hours once we receive all the required documents.
If I’m self-employed, can I still get qualified for an investment loan?
Yes, as long as you can show two years tax returns supporting self-employment status and all other underwriting qualifications are met.
Should I qualify by myself, or does my wife need to be on the loan with me?
Depending on your goals, and of course each other’s qualifications, it is to your benefit to qualify individually, thus maximizing your access to all of your conventional loan spots.
How long is the prequalification good for?
In general a prequalification would be good for 120 days (the length of time a credit report is valid). However, assuming no negative changes to income, debt, assets and credit score, pending some updated items (paystubs, bank statements etc), a PQ is valid indefinitely.
What credit score do I have to have for investment funding?
Depending on where you are in the acquisition of properties, the credit score requirement changes. A person could qualify for an investment loan with a scores in the mid 600’s, however this would require the individual’s application to have compensating factors, things like strong assets or low DTI (debt to income). Once an investor reaches loan spots 7-10 however credit score rules change and require a min middle credit score of 720 without exception.
What kind of documentation will I need to furnish to get prequalified?
Will I need to get prequalified for each investment property I get a loan on?
No, you will only need to go through the full PQ process once. Of course as time passes, we will need updated items for expired documentation, things like paystubs, bank statements, current year’s tax returns etc.
How many conventional loans do I have access to?
Qualified individuals have access to 10 conventional loan spots. After you exhaust those 10, we have an additional 25 loan spots under our Specialty products.
What are current rates for investment properties?
Conventionally speaking rates will be significantly less than say a specialty loan product. Keep in mind that there are a variety of variables that play into what interest rate you secure. Things like credit score, loan size, LTV (loan to value), property type, occupancy and so on. Currently conventional rates can range between 4.25 and 5%. *As rates are subject to change on a daily basis (and even multiple times in a day) it’s important to check in with us for real time market rates.
Can I do a cash out refinance on an investment property?
Of course, there are two types of investment cash out refinances, standard and delayed, and the rules are different for both. A quick call with us can clear up any questions you might have about either.
Does Ridge Lending do other types of loans?
Yes, we do loans for primary residencies, FHA, VA, USDA and we offer a variety of Specialty (Portfolio) loans.
Can I use a HELOC for a down payment on an investment property?
Yes, HELOCS are considered sourced and seasoned funds.
From start to finish, how does the whole process work?
The answer to this largely depends on you and how quickly you can provide the necessary documentation. We set a typical expectation to close at 20-45 days post prequalification. *there are several factors that play into a longer close time, but most commonly a property’s construction completion and appraisal turn times are the factors that can typically cause delays.
How long are appraisals good for?
Am I going to need reserves for an investment property?
Yes, and depending on how many properties you have, those reserves requirements change.
Do investment loans carry prepayment penalties?
Conventional loans do not have prepayment penalties, but some of our specialty products do.
Where does my down payment have to come from?
The down payment for an investment property must be in liquid form (checking/savings/money market accounts) and must be sourced and seasoned, meaning that we must be able to paper trail any large deposit as having originated with you. A minimum of 60 days is required for seasoning of funds.
Can you close in an LLC for an investment loan?
For a conventional mortgage the answer is no, you must close in your individual name. Our specialty loan product do allow the individual to close title in the LLC but the loan itself will still be secured by the individual.
Adjustable Rate Mortgage (ARM)
A mortgage loan in which the interest rate is adjusted periodically based on a pre-selected index.
A gradual repayment of a debt by periodic installments
An opinion of a property’s fair market value based on an appraiser’s knowledge, experience, and analysis of the property based on recent comparable sales.
A report documenting the credit history and current status of a borrower’s credit standing.
An organization that gathers , records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit. EQUIFAX, TRANSUNION, EXPERIAN
The ratio, expressed as a percentage, which results when a borrower’s monthly payment obligation on long-term debts is divided by his or her gross monthly income.
Money paid to make up the difference between the purchase price and the mortgage amount.
Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment.
An account held by the lender into which the homebuyer pays money for tax or insurance payments. Also earnest deposits held pending loan closing.
A form of insurance in which the insurance company protects the insured from specified losses, such as fire, windstorm, etc. also known as homeowners insurance.
The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage.
The fee charged by a lender to process, underwrite, close, fund and package the mortgages it plans to deliver to the secondary mortgage market; usually computed as a percentage of the face value of the loan.
A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate. The rate lock may include lender costs for a specified period of time to guarantee the rate.
The decision process whether to approve a loan to a potential homebuyer based on credit, employment, assets, debt to income ratios, and other factors and the matching of this risk to an appropriate rate and term or loan.
Verification of Employment (VOE)
A document signed by the borrower’s employer verifying his/her position and salary.