Lender Notes

Structuring the conventional purchase as a simultaneous first and second avoids jumbo loan requirements and their heavy reserve obligations. The first loan at 65% LTV (rather than maxing the $840K conforming limit) secures better rate pricing, while the second is a HELOC at prime plus approximately two points, interest-only during a three to five year draw period. After the draw period, the HELOC amortizes over the remaining term at whatever rate prime dictates at that point.

On the refi side, a non-QM refinance at 90% LTV can wrap both loans into a single payment with no mortgage insurance. This is preferable to a conventional refi, which caps at the $840K conforming limit and would still require a second loan for the remaining balance. A rate-and-term refi keeps the payment lower; a cash-out refi at the full 90% LTV unlocks available equity but increases the monthly by roughly $1,000.