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Old 06-20-2018, 09:59 AM
 
1,204 posts, read 567,098 times
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My wife and I will be doing a 1031 exchange in about a year. The down payment we will be putting on the new home will be approximately 40% (and potentially 50%). I seem to recall hearing that you can work with a lender on getting a better mortgage interest rate based on that substantial of a down payment (our credit is excellent). Is anyone familiar with this?
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Old 06-21-2018, 06:36 AM
 
Location: MID ATLANTIC
8,136 posts, read 19,978,707 times
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Negotiating depends on current trends. I would suggest you spend the next 8-9 months here, reading. What I tell you today may not even apply to future markets. For example, right now the market is highly competitive, but in 8 months, the mortgage market could be on overload, you may have trouble getting a return call, let alone a negotiation on rate.

Your best approach would be to find a lender when you are ready to buy. Then, when you have a property to discuss, get a quote from a couple lenders. If your lender is higher, request a price match. Be prepared to provide your competing quotes in writing. But, until you have a property, lenders can tell you anything they think you want to hear.
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Old 06-22-2018, 11:32 AM
 
1,204 posts, read 567,098 times
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Looks like the answer is nobody here knows anything about this process. And no, I'm not buying that I'm going to have trouble getting a return call

Thanks anyway.

I'll reach out to another source instead (was simply hoping that maybe someone here had gone through this type of transaction). Apparently not.
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Old 06-22-2018, 04:29 PM
 
3,806 posts, read 8,249,913 times
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I posted a reply, then deleted it, because you wouldn't have liked it and I'm working on being more Positive.

50% down doesn't result in any better terms than 25-30% down would, unless it facilitates a change in the loan type, ie., Jumbo to Conforming. In fact, it could hurt if, for example, the resulting loan amount is under $100k.

One appropriate place that I suggest you check into is an awesome website called Lending Tree. I hear you get the banks fighting for your business!
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Old 06-23-2018, 12:49 AM
 
1,204 posts, read 567,098 times
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Quote:
Originally Posted by Pfhtex View Post
I posted a reply, then deleted it, because you wouldn't have liked it and I'm working on being more Positive.

50% down doesn't result in any better terms than 25-30% down would, unless it facilitates a change in the loan type, ie., Jumbo to Conforming. In fact, it could hurt if, for example, the resulting loan amount is under $100k.

One appropriate place that I suggest you check into is an awesome website called Lending Tree. I hear you get the banks fighting for your business!
I can tell you for a fact that I had a client that did negotiate for a better interest rate doing exactly what I said (has done it multiple times). Admittedly, his homes were at a very high price (usually $10 million +). I remember when my wife and I relocated (without jobs), we were told on one of the forums here (by numerous posters) that we would find it difficult to get into an apartment or house, even though we were willing to pay an entire year's rent upfront (and could have given a deposit for up to 3 years). He told me we should be asking for a discount if we were going to do this (and he was right...that's exactly what happened). And btw, not even a local realtor knew this (I guess they don't typically deal with these type of transactions...he mirrored the same comments as the posters). There's no logical reason why putting more of a down payment should make things more difficult (you are mitigating the risk for the lender or home/apt owner in the event of a rental). People that put significant amounts behind a loan don't walk away from loans (that should be more than apparent).

Again, I thought perhaps there might be someone on a forum this big that might have done a transaction like this. I have since reached out to my ex-client and will be having a discussion with him on the matter in a couple of weeks (he's in real estate and builds luxury condos).

All I'm seeing on these replies are guesses from people that haven't actually done a transaction like this.

Thank you anyway. I'm done with the post now as I've already reached out to a reliable source.

Last edited by JJonesIII; 06-23-2018 at 01:25 AM..
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Old 07-05-2018, 05:58 PM
 
Location: South Carolina
234 posts, read 138,682 times
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You got two replies from mortgage loan officers, so I'm guessing they've done many of these types of transactions. Let me be the third loan officer to tell you the same thing--50% down doesn't get you a better rate than 25% down on a conforming loan. Being a "tough negotiating guy" doesn't get you much more than chuckles from most loan officers. We've all dealt with clients with that attitude. In all reality, I'm happy when they go somewhere else because they tend to be the most difficult clients to work with because they think they know more than I do when it comes to agency guidelines and federal lending laws.

However, if you're planning to buy a $10M house (completely different type of loan), then I hope your client will share his secret with you! Otherwise, if your loan is within conforming limits, you get the same deal as every other loan applicant wearing your shoes.
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Old 07-08-2018, 04:37 PM
 
1,204 posts, read 567,098 times
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Quote:
Originally Posted by LoanChic View Post
You got two replies from mortgage loan officers, so I'm guessing they've done many of these types of transactions. Let me be the third loan officer to tell you the same thing--50% down doesn't get you a better rate than 25% down on a conforming loan. Being a "tough negotiating guy" doesn't get you much more than chuckles from most loan officers. We've all dealt with clients with that attitude. In all reality, I'm happy when they go somewhere else because they tend to be the most difficult clients to work with because they think they know more than I do when it comes to agency guidelines and federal lending laws.

However, if you're planning to buy a $10M house (completely different type of loan), then I hope your client will share his secret with you! Otherwise, if your loan is within conforming limits, you get the same deal as every other loan applicant wearing your shoes.
Actually he did reply and it's not really a secret. He said it's not a lot and that you will always do better with private banks of which he has a relationship with. Obviously for a loan of higher magnitude, it will have more of an impact. But yeah, nobody has different rates. Apparently that's news to you. Oh well. Thanks. Think I'll go with the person I know versus anonymous internet woman with attitude.

Last edited by JJonesIII; 07-08-2018 at 05:05 PM..
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Old 07-08-2018, 05:54 PM
 
Location: NC
7,567 posts, read 9,565,782 times
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Quote:
Originally Posted by JJonesIII View Post
My wife and I will be doing a 1031 exchange in about a year. The down payment we will be putting on the new home will be approximately 40% (and potentially 50%). I seem to recall hearing that you can work with a lender on getting a better mortgage interest rate based on that substantial of a down payment (our credit is excellent). Is anyone familiar with this?
Just FYI, you cannot live in a home financed via your 1031K tax exchange. So is this new "home" a rental property?
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Old 07-09-2018, 03:39 AM
 
1,204 posts, read 567,098 times
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Quote:
Originally Posted by luv4horses View Post
Just FYI, you cannot live in a home financed via your 1031K tax exchange. So is this new "home" a rental property?
Of course. I'm well aware of the fact that it has to be rented out for a period of time before you move in (but the IRS will allow an owner to move in once they deem the initial intent was to make it a rental property). We will be working with a 1031 specialist when the time comes. Thanks.

I'm good.
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Old 07-11-2018, 10:51 AM
 
15 posts, read 10,163 times
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I am not a lender and express no opinion on interest rates.

I am curious about two things:

1. How is the rental market for $10 million + homes?

2. With the §1031 exchange, how long must you rent the home before moving in?
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