All Forum Posts by: Ashley Lamoreaux

Hi Chris,

Yes! If at least one unit is delivered vacant prior to Closing or there is evidence it will be vacant within 60 days of Closing (allowing you to move in within the 60-day window of Closing allowed for mortgages), then you would be eligible to do primary residence conventional financing versus investment property conventional financing. Conventional financing allows for both investment properties and primary residence properties, but primary residence financing has lower down payment requirements and typically lower interest rates and lower mortgage insurance! 

Investment properties are allowed with conventional, but have steep down payment requirements and the rates are usually worse. They also are restricted to no more than 4 units and all units have to be residential...there are some programs that allow for a fraction of the property to be commercial, but I have never come across a property with mixed use that qualifies because usually the commercial space is greater than the residential which makes it ineligible. So any investment property with 5 units or more, or a ton of commercial space, would need to be a commercial loan instead of a conventional residential loan.

Hope this helps!

Regards,

Ashley

Hi Chris,

Unfortunately, this would have to be done investment at first, and then if it makes sense to refinance, you can refinance as a primary residence once one of the units is vacant and you have occupied the unit. Occupancy fraud is on the rise with the current home prices and rates rising, because people want the lower rate for primary residence and lower down payment with the inflated home values. So, lending guidelines have become more strict to avoid occupancy fraud, especially with multi-family properties. One of the main items that we have to show, is that at least one unit is vacant prior to Closing. 

One thing you could do, is ensure the Closing is within 60 days of the lease ending, and do a Use & Occupancy Agreement in the Purchase and Sale Agreement. However, for primary residences, you have to occupy the property within 60 days of Closing, so if lease ends 1/31/23, you could Close 11/30/22 with a 60-day U&O agreement. Bit of a sticky situation, I would get with your realtor, lender, and attorney to discuss a U&O option if you were to go that route.

Hope this helps!

Regards,

Ashley

Hi Gerrard,

FHA unfortunately does require you to pay the monthly MI for the life of the loan. FHA has two types of MI involved with every loan: monthly, and the upfront mortgage insurance premium (MIP), that is paid once at the time of Closing or financed into the total loan amount. The only way to remove monthly MI on an FHA loan is to refinance out of FHA.

Conventional, the monthly MI automatically falls off at 78% equity based on the appraised value at the time of Closing, however, you can request it to come off at 80%. I usually tell my clients to keep their amortization table from their Closing documents handy to know when they hit 80% to request removal so they don't pay the extra waiting for the automatic renewal. The most common misconception with MI removal, is that people see their value went up, so they think they are now eligible for removal, but it is actually based on the value at time of Closing. Only way around that, is to speak with the Servicer about getting an appraisal done for possible removal.

In your case however, since it is FHA, the only way to remove it would be to refinance out of FHA into Conventional or some other loan program type such as Non-QM.

Hope this helps!

-Ashley

If you are doing a rate and term refinance and are the sole owner of the LLC, you can refinance the loan into a conventional fixed mortgage under your name. The deed transfer can be done at Closing, you do not need to do it beforehand. The Lender will need some sort of verification that you are the sole owner (tax returns work, CPA letter). They will also need to get a Verification of Mortgage form completed from your current Lender, since the mortgage history won't be reporting on your credit report. They'll want to make sure the current mortgage is in good standing. I usually ask my clients to connect me with their prior Loan Officer or someone they worked with at their prior bank to get the form expedited because sending it to corporate to complete can take days...especially with the recent turn times in our industry with servicers.

Hi Ellie, I was the Analyst for a property in Boston that had slight soil settlement and required an engineers report for further evaluation after the Appraisal was done (which was made "subject to" the engineer report). The report noted that the settlement was hazardous to the structure and they recommended a geographical engineer to test the soil for further settlement or potential sink hole down the road. The loan was denied because of this. I also had a loan denied for having contaminated soil underneath the property. Fannie/Freddie and HUD will not buy loans with Environmental Hazards because Environmental problems are a far greater source of loss to lenders than fire or title risks because when the property becomes hazardous, its value plummets and if the borrower defaults, the lender could be responsible for costly clean-up fees, third party damages, or legal fees from town violations. This will also impact the Appraisal the Buyer obtains as well as far as value goes and coming back "subject to" versus "as is".

Hi Lauren,

Most Conventional Lenders can do new construction loans, even on investment properties or multi-family properties. The loan closes once the property is complete and the Certificate of Occupancy is issued by the Town. If you are looking for a Construction to Perm loan, to finance the construction, that is where you will find less Lenders are able to do it. We do Conventional new construction, but not construction to perm because it's more risky and we would have to hold the loan on our warehouse until the building is complete and a lot of Lenders do not have the capital to do so. They sell the loans off once closed to servicers, to get them off the books.

Hi Curt, It depends on the Loan to Value, and the current rate environment. Most Conventional loans require a 6-month wait period though from the date you purchased to be able to do a cash out refinance. FHA loans require 12 months. You can always reach out to a Lender and ask them to do a quick quote scenario by providing some information as far as how much cash out you want to take out and what you think the current value of the home is now, as well as what your current mortgage balance is. Hope this helps!

Hi Jacob,

Have you considered exploring a cash out refinance option? Only downside between HELOCs and cash out refis right now is rates on investment properties for refinances and purchases are pretty high compared to recent months/other occupancy types due to the GSE caps that were established. Have you tried looking into Bank of America or Citizens for a HELOC? They tend to have good HELOC options but I'm not sure if they restrict them to primary residence only or not.

-Ashley