How I overcame a YEAR LONG refinance

So, let me ask you a questions to start. How many times would you submit your documents for a refinance if you had trouble getting a loan? Would 10 times be sufficient? 20? 30? 40? How about over 250 times... Well, that's what I had to do to get refinanced out of a hard money loan into a decent rate. I ended up with a 5.375% fixed rate for 30 years. But it was anything but easy.

Because 2010 was a year that I revamped my company and essentially had a lot of 're-startup costs', the banks nowadays do not care one ioda that these are one time costs; they assume you will have them every year. Same with points paid to the hard money lender when I bought this property. (9 of them....) So, with all that against me, that meant I could NOT use a portfolio lender. Portfolio lenders still look at your tax returns and because of the great loss in 2010, I could not use any portfolio lenders.

And, part of my restructuring was getting rid of some land that was costing over $200/mo; well, banks don't care that you sold the land at the beginning of the year, have the HUD, purchase agreement, and deed showing you don't own the property any more. Because the expenses for it showed on the 2010 taxes, it is still counted as expenses.

So, as you can see I have a bit of a unique situation as to why portfolio lenders didn't work for me

Also, my hubby has a J O B, and part of his job he gets flex pay (he can take as all cash or use the benefits offered, buy extra vacation, etc. That $1750/mo not counting and the $1850 of rents the banks they didn't count gave the banks the excuse to NOT lend to us for being such a high risk.

Having credit in the 800s means nothing in today's environment. The banks don't care at all that you have never made a late payment in over 25 years. Its not important to them in the least. For banks, they see my husband and I as real estate investors and we are stereo typed along with the wanna be investors that infiltrated the market from 2003-2006 and blamed for the artificial increase in values (we all know that this isn't true, but the banks don't want to admit anything of their part of the real estate crash.)

Whoops, got off track there.

Anyhow, after trying to do the loan several different ways and several different banks, both traditional and portfolio,we found a lender in July that would do our loan. This was a portfolio product within a bank that is not advertised, and was pretty much a sure thing. We successfully went through underwriting... not once; not twice, but three times. Met all conditions without any problems. But, so lucky (NOT) for us, this company was in the middle of restructuring and our UWs kept leaving or getting laid off.

The fourth underwriter we got, IN NOVEMBER (we stuck with them because they could do the loan...) was UBBER conservative. She decided not to take my husband's flex pay (the other 3 did) because a 12 year history of it, with a letter from HR stating it is continuing; was WAYYYYYYYYYY too risky for her... so, she happily turned away our file after FIVE MONTHS of sticking with this company. This left us with ONE month to refinance before our HML came due.

Because we HAD to have this loan close, we opted to bring in a cosigner. Now, there really are no such things as cosigners. They are all coborrowers. VERY FEW banks will add people to a loan that are not on title, but we did find one. We humbled ourselves and went to family members to cosign for us. In 25 years of loans, this was a first for us. I also took myself off the loan; because I am 51% owner of our company; it removed 51% of the company's losses.

So, after literally submitting a ton of paperwork to over TWO HUNDRED FIFTY LENDERS, we finally got the loan done by thinking of ways that we could get around the guidelines.

BTW, we met all the Fannie Freddie guidelines of traditional banks, but banks have their own overlays, and UWs can lose their license if they accept a loan that isn't up to par. So, ONE individual person can deem your file unworthy for any reason they see fit and justify it so they don't lose their license. There is nothing you can do about it at that point.

So, although this was a tremendously long experience, I learned a lot (there's a tidbit I will share in response to this that you will want to read about , but this post is getting WAY too long, so I'll break it up). Despite the value of the home being $330K and me buying it for $199K, we could NOT get cash out because I made one mistake. I will go into the SECRET thing you need to do in order to cash out on properties nowadays; especially when you are financing more than 4 of them. Also, I'll share a little experiment I did to show how ridiculous the banks are. NEXT POST

But, the moral of this story? I could have given up many times. MANY times I WANTED to just be DONE with it, sell the house and cut my losses. But, I don't give up and I BELIEVED that somehow we would get this house refinanced. I had to be extremely determined, focused and look at the 249+ failures as me being one step closer to success, instead of saying 'this won't ever work'.

In my time here, I have seen many well intentioned people start, and then give up and say 'this doesn't work'. It was a journey of tweaking things little by little until we found the right solution. And, my network of portfolio banks now is HUGE; so when I get these 2011 taxes done, and show how my company has turned around from loss to being profitable, I am set up for great opportunities in the next couple of years.

Guess what I'm focusing on now? You bet, my 2011 taxes. I'm also a gluten for punishment and looking for a rental in Phoenix and AR. My husband thinks I'm crazy. Maybe I am, but who really is normal?