All Forum Posts by: Marc Dube

@Chris Turek

Do a home equity and keep your rate. Your loan to value may be lower because it’s non owner but you could probably go at 75-80% of the value

@Patrick Mortenson

Hi Patrick

Try a lender who will do a heloc appraisal for you and you would only have to pay for the appraisal if the loan goes through. There are lenders out there. That way you can apply for a home equity. Closing costs should be next to nothing for a home equity and if the value comes in where you think it will you can get rid of pmi and also get your equity loan at the same time.

@Beverly Hinds

Typically you will need year to date paystubs as well as w-2and 1099. So the job loss will hurt you for conventional financing. Is your $3,000 in business income on your tax returns? That may help. You can also always use a non-occupant coborrower. They will have to be on title with you but you can use their income to Help with debt ratios.

@Armand

I agree with Chris. Find a new lender. You can have 4 people on a loan.

One other thing to keep in mind after you purchase...if you are looking to refinance the property to stabilize the rate/terms, you will need a 2-yr history of being a landlord to utilize the rental income to qualify for your new loan. Or at least a 12-month history with your tax returns, and the calculations are different as of march 2018 with Freddie Mac. Watch your deductions on your schedule E. There is a form which you can use to determine what your allowed income will be from schedule E real estate that I believe you can find on their website. Its a form 92, which you can plug in your numbers to calculate net rental income from property.   If you can, I would always try getting owner financing first as it allows you to get easier terms/lower down payments than having to pull your own money out for your purchases. Your lease terms will also have to be at least a 1-year term, as Freddie mac will not utilize month-to month tenant at will terms if you want to use that income for newer property owned less than 1 year 

A local bank should have a better grasp of what they are financing and more willing to offer other options if the loan doesn’t meet secondary market guidelines. out of state lenders may or may not have an understanding of local markets, or, private road agreements, etc. and can slow down the process. If you use a home equity for your down payment just realize that you are risking your other property if the VR ever runs into problems. Also, if you state that you are using the new property for rental income the lender will not consider this a second home. As far as the other lender using a 1.25 debt coverage, that sounds like it’s a commercial loan, as only commercial lenders use that type of factor

Depending on the individual lender they may do an online valuation or even go off the tax assessed value from the town. I took out a home equity with one credit union and they went off the tax assessement, which in my case was substantially higher than what an appraisal would have come back with. In your case the online valuation may be higher because of the comps in your area. Check around with the different credit unions as well as banks you may be surprised.

if its an owner occupied home you could also do a home equity line of credit before the 6 months is up. that way she can get her cash back and the ability to get long term financing later.

I would say that it all depends on what your stress level will take. how much do you make with your new construction deals? If you can make at least that or better Id say you're doing ok. For me, I like to stick to what I know. If you are solid with your estimates and after repair values then go for it. 

do you have any other funds besides the 401k? can you get another family member to go on the loan? do you have anything of value that you could sell? If so get a purchase contract for the item and you could use that as funds with Freddie mac also. if all else fails get a hard money lender to do your financing upfront then refinance it with a heloc.