New members looking for good mortgage for 3-flat -broker/bank

Buying & Selling Real Estate
12yFollow

New members looking for good mortgage for 3-flat -broker/bank

Asha Holly
Chicago, IL · Member since 2014 · 8 posts · 0 votes

Hello,

My husband and I are new to the site and have just put in an offer on a 3-flat(owner occupied) property for $329,000.  We are looking to put preferable 20% down with a good rate. I noticed most brokers want 25% down which we would be willing to do if we had to.

If anyone knows of any brokers/banks in the Chicago area that have great rates and good mortgage brokers we would be all ears.

Thank you,

0Reply
22 views

Most Popular Reply

Brie SchmidtBusiness Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
12y

@Albert Bui - correct me if I am wrong - but now a days the rate you get is so heavily dependent on your financial profile and credit score that the rates you get won't vary much broker to broker?

Podcast Guest on Show #132
Second City Real Estate4.821 Reviews
WebsiteView Page
1Reply
See this reply in the discussion

6 Replies

Jump to latestLatest
  • Mark AinleyBusiness Member
    Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    a mortgage banker we use right now is doing a lot of owner occupied multi unit deals and may be a good resource.  Chris Puleo 630-742-3198 Republic 

    [email protected]630-781-6744Podcast Guest on Show #72
    GC Realty & Development LLC4.61090 Reviews
    WebsiteView Page
    0Reply
  • Albert Bui
    Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    HI Asha,

    If the property you're buying is under market it may be better to purchase using FHA depending on the condition of the property since FHA requires a very small down payment of 3.5% on 3 unit residential.

    This way you can go in with very little money at risk, fix/repair, and refinance into less expensive conventional financing about 7-9 months post FHA closing/rehab.

    The upside is you have less money at risk and you can use forced/found equity to serve in place of what would have been your contributed equity via much larger 25% down payment. This frees up your money to act as reserves to weather a financial storm or can be used to reinvest else where allowing more flexibility to your finances.

    The downside is you have interest rate risk on conventional rates after the FHA closing for 7-9 months in which you dont know for sure where the rates will go and the payment on the FHA loan is higher in the short term than conventional. Also since you put less money down your loan amount is higher and therefore your payment is higher, but as long as the cash flow and ROI works out within your goals it might be a sound decision.

    0Reply
  • Danny Duran
    Rental Property Investor · Mars, PA · Member since 2014 · 92 posts · 36 votes
    12y

    @Asha Holly, try getting mortgage numbers from direct lenders (start with your own bank). I found that the rates were lower and the fees were less expensive than the brokers. I can give you the name of the loan officer at BofA that I'm using if you'd like. @Albert Bui, great points. I have been looking into the same FHA idea. @Asha Holly, in Illinois, the maximum FHA loan for a 4-flat is 703,250; 3-flat is $565,900; 2-flat is: $468,150. You're well under the 3-flat maximum loan amount with your $329K MFR. Here's a great crash course on FHA: http://www.bankrate.com/finance/mortgages/7-crucia...

    I'm in the same boat as you. Just beginning to look for a 3-flat or 2-flat to owner occupy in Chicago. What neighborhoods have you honed in on? First and foremost on my list is positive cash flow (not heavily reliant on an appreciation play). Need a safe neighborhood (where the dog can be walked late at night, early in the morning) that will attract stable tenants. I presume many of these things were important to you and your husband as well.

    Can you share what is most important to you in this process and what you've learned along the way? I'd love to learn from a couple who have just made this journey to maximize this quest. Thank you!

    0Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    12y

    @Albert Bui - correct me if I am wrong - but now a days the rate you get is so heavily dependent on your financial profile and credit score that the rates you get won't vary much broker to broker?

    Podcast Guest on Show #132
    Second City Real Estate4.821 Reviews
    WebsiteView Page
    1Reply
  • Asha Holly
    OP
    Chicago, IL · Member since 2014 · 8 posts · 0 votes
    12y

    thanks everyone for your great insight! Sorry for the delayed response I'm on a much needed vacation ;) we are close to closing in on negotiations and need some help deciding if this property is worth the money at this point. We learned that there are several things in need of maintenance.

    First let's talk rates: Danny, I agree and will start with my own bank(s)/lenders. However I've seem that most of them need 25% down ans I can only do 20%. With that being said the broker I have is offering 4.375% on 30yrs 

    This was his breakdown:Rate – 4.375% no points

    Lender fee - $1100 (this covers fee/credit/tax cert/flood cert)

    Appraisal fee - $595 (2-4 unit) 

    a 2 or 3 unit so your total lender related costs would be: 1100 + 595 = $1695.

    we are now not certain of the property we have been in negotiations with. For the reasons being. in need of replacement kitchen cabinets, bathroom rehab in near future (from 1960's, slightly response/painted since then) Totaling about $20,000(kithch & bathrooms(

    New roof in 10 years- $15,000. Still has old boilers (2). 1 new.

    0Reply
  • Polina Goncharova
    Accountant · Chicago, IL · Member since 2014 · 38 posts · 7 votes
    12y

    Asha,

    So glad to see you moving forward! What kind of returns are you looking for? CF/unit ? On my current deal the rents are $800 (market) for a four unit and List Price at $299 (not closed yet so cannot reveal final price). See my deal post here:

    http://www.biggerpockets.com/forums/88/topics/1318...

    Wendell De Guzman has a great CF Analyzer here: http://www.biggerpockets.com/files/user/Mister4clo...

    How are you coming at the $100/door calculation? Are you planning on managing this?

    I know that on my first deal I wanted to ensure that I had CF on day one (after I move out) after all of the costs (in CF analyzer). I will be living in one of the units so I will be breaking even until I move out. 

    Looking forward to hearing more,

    Polina

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free