B2R Finance Announces New, Easier Underwriting Guidelines
New underwriting guidelines at B2R Finance could translate into more financing opportunities for investors in the residential rental space. Recent underwriting adjustments have widened the credit box and made qualifying easier than before.
We want borrowers to be aware of several key changes:
- Now only 90 days of seasoning is required for a cash-out loan with up to 75% loan-to-value (LTV) financing.
- Non-recourse loans are now available up to 60% loan-to-value without cash management requirements.
- Non-recourse loans are now available to foreign nationals up to a 75% LTV.
- Our new streamlined documentation and underwriting process reduces the number of documents that borrowers must provide, shortening the typical time it takes to close a loan with B2R for loans under $5MM.
Investors can buy homes, renovate them and borrow against the newly appraised value after just 90 days of ownership under B2R Finance’s new underwriting guidelines. Other lenders providing conventional mortgages typically require the borrower to hold the asset for as long as 12 months before they’ll consider a cash-out loan on the reappraised value.
As an example, suppose you bought a home for $50,000 and spent $25,000 on renovations. A reappraisal puts the home’s value at $100,000, 25 percent higher than what you’ve invested. Some lenders may only give the investor credit toward the purchase price and the actual renovation cost if the investor hasn’t owned the property for at least a year. Here at B2R Finance, we are willing to give credit for the newly appraised value after just 90 days of ownership.
NON-RECOURSE WITHOUT CASH MANAGEMENT
At 60% loan to value or less, borrowers can finance their portfolio without the typical required cash management account on non-recourse loans. This enables the borrower to have the security of a non-recourse loan, with the benefit of controlling their own rental cash flow each month. Avoiding cash management reduces costs associated with setting up and maintaining rent deposit accounts that are typically required on non-recourse loans.
We’ve also adjusted our LTVs on loans to foreign nationals, going from 65% LTV up to a 75% LTV. We believe foreign nationals have a high level of interest in U.S. single-family housing and we’ve seen interest from individuals in a wide variety of countries. As a lender, we want to be the ones to provide the opportunity to foreign nationals to buy more homes or to borrow against their existing portfolios. This opportunity, we believe, is wide open.
For loans less than $5MM, B2R Finance implemented streamlined documentation and underwriting guidelines to make the process of getting a loan even easier as it works toward getting most borrowers approved and financed within a 45-day window.
The total number of documents required for the new underwriting process has been reduced substantially and the approach to property cash flow underwriting has been simplified to provide more transparency to borrowers.
These weren’t the only changes we made. I want to also note several other adjustments that should make the asset-based lending done by B2R Finance even more appealing to investors or potential investors:
- Recourse loans are available down to a 660 credit score and nonrecourse loans are available below that mark. B2R Finance is focused on the asset and its ability to produce cash flow, not the personal credit history of the investor.
- A look-back on major life events such as bankruptcies and foreclosures has been reduced to two years. This change reflects our view of lending against the asset —a commercial lending view that is often at odds to traditional residential mortgage lending.
- Nonrecourse loans are available with a minimum loan balance of $500,000. This was reduced from our previous minimum of $1 million.
- Full term interest-only loans are available for lower leverage loans.
- Investors can obtain a mix of interior/exterior appraisals on larger portfolios, offering both a major cost and time-saving benefit to investors with sizable portfolios.
We believe that these changes will open up financing opportunities for investors who may not have previously qualified. At B2R, our goal is to be a trusted partner to real estate investors. We’re dedicated to helping you find faster, easier and smarter ways to free up equity, improve cash flow and buy more properties.
If you have a portfolio that needs financing, give us a call at 800-227-8107.
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