Securing an FHA loan on a Quad

[Chanise P.]

Hi All!

I've been soaking up tons of info over the last year and a half and getting my credit scores and savings up to par and finally feel able to pull the trigger on investing. This is my first post to the forum.

I currently have a few savings/checkings account with 3 credit unions (navy federal, merck employee, and american heritage). I checked with 2 of the 3 so far and have found some weird policies with FHA loans for quads. Navy Federal just flat out doesn't offer it(2 units or less). Merck's rates arent the greatest and I have an appointment with a mortgage specialist at American Heritage.

My question is..has anyone experienced this previously? Is there a way around this? I researched FHA and found that you can get a quad with that loan but this is pretty disheartening info i'm learning from my banks.

Also Navy Federal has amazing rates and i would LOVE to use them but i got a closing cost quote and it came in at $22k!?! Isn't that excessive for closing costs? This number didn't include the 3.5% downpayment on a 275K loan.

Any advice is appreciated!

[Troy Sheets]

Originally posted by @Chanise P.:

@Troy Sheets Thanks for your response! I read your post and that's EXACTLY what I plan to do! It just seemed outrageous to me that they would ask for huge closing amounts to the tune of $20K+ I guess i will look into mortgage lenders and not banks though i'm not sure of the difference. About how long did it take you to find the property? Was it completely occupied with one lease set to expire at time of purchase or was it only 75% full when you purchased?

 Your realtor should be able to give you a rough estimate of closing costs as well. They're ALWAYS more than I expect and many times they're still higher, by A LOT, than the estimates you're given. I'm only suggesting a broker because you're running into problems at banks. A good broker, which I can recommend, will resolve issues for you, not create more. Many times it's how things are presented to mortgage underwriters that make all the difference and a good broker knows how to stroke them just right to ease their fears. 

It only took a month or two to find my quad but I knew what I wanted and where I wanted to be. There wasn't a lot of inventory that suited my needs due to lease timing and condition of the property so, for the area at the time, I overpaid a bit. I needed a property that was livable (but not too nice so I could force some appreciation through upgrades and repairs) and a lease that expired within 90 days of purchase (or an empty unit). 

If you find a place you like but there's no empty unit or lease expiring, you can always ask the landlord to incentivize a tenant to leave early. Let's say you find a place for $225k and it's perfect but all leases are in force for 6 more months. Ask the owner if he can get a tenant to leave in 3 months. No dice? Ok Mr. Owner, I'll pay you $230k for the property, or $235k (or whatever number still works for you as a buyer but gets the deal done) if you can make that happen. Maybe he pays the tenant $5k and pockets $5k and you still get your quad. All you need is a revised lease showing the tenant in the unit you plan to occupy will be out in 90 days or less. There's always a way.