All Forum Posts by: Cayton Green

@Reid Chauvin - Thank you for your reply! We're definitely going to try and dispute this with her current lender and hopefully at least get them to pay for the HOA questionaire. I agree with your assessment that they did a bad job of setting expectations from the get-go, or maybe just unfamiliar with the new condo requirements. Either way, hopefully they recognize they put her in a bad position and rectify it. Thanks again!

Hello,

My GF is in a pretty frustrating situation with her current lender and I wanted to explain the situation to hopefully get some guidance on what she should do.

She is currently in the process of a cash-out refinance on her condo (investment property) with her lender. Everything was going smooth at first. She signed her Closing Disclosure 3 days before closing day. Then, the DAY BEFORE closing day, the lender informs her that the condo is in fact 'non warrantable' and they can't lend on a traditional conventional loan and need to change the loan terms to a 'non warrantable' loan product which greatly increases her interest rate. They waited till the last minute to get an HOA questionaire which on the day before closing caused them to change loan terms.

The original rate they agreed on and signed a closing disclosure was a 3.875% rate, and the new 'non warrantable' loan product is at a 5.5% interest rate.

This obviously was a huge surprise to us, and we now want to explore other options with other lenders. We just got word today from her current lender that if we don't move forward with the 'non warrantable' loan, that we'd still be charged for the appraisal and the HOA questionaire.

--Can they still charge us for the appraisal and the HOA questionaire even though THEY changed the loan terms last minute? We were misled until the day before closing and never agreed on this new 'non warrantable' loan.

If in fact this sound illegal on their part, what options do we have to dispute this?

Any help is greatly appreciated! Thanks!

Hello,

My GF is in a pretty frustrating situation with her current lender and I wanted to explain the situation to hopefully get some guidance on what she should do. 

She is currently in the process of a cash-out refinance on her condo (investment property) with her lender. Everything was going smooth at first. She signed her Closing Disclosure 3 days before closing day. Then, the DAY BEFORE closing day, the lender informs her that the condo is in fact 'non warrantable' and they can't lend on a traditional conventional loan and need to change the loan terms to a 'non warrantable' loan product which greatly increases her interest rate. They waited till the last minute to get an HOA questionaire which on the day before closing caused them to change loan terms.

The original rate they agreed on and signed a closing disclosure was a 3.875% rate, and the new 'non warrantable' loan product is at a 5.5% interest rate. 

This obviously was a huge surprise to us, and we now want to explore other options with other lenders. We just got word today from her current lender that if we don't move forward with the 'non warrantable' loan, that we'd still be charged for the appraisal and the HOA questionaire.

--Can they still charge us for the appraisal and the HOA questionaire even though THEY changed the loan terms last minute? We were misled until the day before closing and never agreed on this new 'non warrantable' loan.

If in fact this sound illegal on their part, what options do we have to dispute this?

Any help is greatly appreciated! Thanks!

@Matt Stricklen Well I had it refinanced last year to a 15 year mortgage. If I had kept it on the 30, it would cash flow maybe a bit over 100/month being conservative. It's relatively new construction (built in 2015) so could lower estimates for cap ex and maintenance a bit. The LTV right now is around 66% (loan 150K and its worth about 225). I am concerned about how a lender will view my current place in Hutto...as they would need to at least count a portion of rent for DTI reasons so I could purchase my new primary. In your experience, is that something lenders will work with even though I don't have landlording experience?

@Aaron Gordy That's a great point and honestly didn't even cross my mind to stay in Hutto. I definitely like the idea of being that close to my rental as I'll have to self manage. Hutto I feel is appreciating nicely as well. Thanks for the suggestion!

Thank you all for your thoughts on this! Seems like it is almost split on which path to take. My thought process is to try to ride this appreciation wave for my new primary home, then, in 2-3 years time leverage the equity build-up (plus my house hacking income) into more properties that cash flow. My new primary home would be evaluated based on whether it can cash flow once I move out (most likely in 2-3 years time). It would need to cash flow. The only hurdle I keep coming back to is my current primary home. It has appreciated about 50K in 5 years. Like I said, it would be about negative $50 in cash flow, however it's on a 15 year mortgage. It could cash flow 1K or more once that is paid off so I have that to consider. 

I'm a little nervous focusing more on appreciation, as some of you have wisely pointed out that it's basically gambling on the market. I guess worst case scenario if no appreciation happens, I'll have one property that cash flows once I move out (new primary) and one that has quite a bit of equity in it still (current primary) that I could always sell and have a nice pay-day which I'd put into another cash flowing property in a less expensive market. Lot to think about!

Hello All,

I'm struggling with deciding on how to start my RE investing path. I've got a couple scenario's that I'm contemplating and just wanted to run it by the Biggerpockets community to see if yall have any insights, suggestions on how to proceed. 

Option A: Find an investment property in Temple/Killeen area with an emphasis on cash flow: I liked this idea at the beginning because of the lower cost of housing (seeing houses 70-120K that fit my buying criteria) and the greater potential for cash flow. The drawback is that I'm an hour away from that area (i live in Hutto) and I'm not too familiar with that market.

Option B: Turn my current primary home into a rental and buy my new home in the appreciating Austin market: Now this is the idea I've recently been giving much more thought. With all the news of new companies setting up shop in Austin and all the growth we're seeing, I just feel maybe, long-term, this option could better. My plan is to buy a new primary property that hopefully I can get under market value that needs minimal rehab and I can build some sweat equity into it. Only drawback I can think of is that my current home in Hutto, once turned into a rental, would most likely be negative cash flow when you consider all expenses including vacancy, CapEx, maintenance, PM (about $50-100 a month) but Hutto has been appreciating fast as well and I really want to keep this property due to that.

Side note: I do house hack at the moment. I've been renting out 2 spare bedrooms for about a year now, and plan to do the same if I buy a new primary property in Austin MSA. 

My ultimate goal in RE is to have a portfolio of buy and hold properties that I can eventually live off of with the cash flow. Cash flow always appealed to me more, however I'm starting to think the Austin appreciation potential is almost too good to pass up. Any thoughts, guidance, or insights would be greatly appreciated! 

Thank you all!

Hi Danny,

You really bring up some good suggestions! After some thought, the strategy of refinancing into a 15 year note - pay down as much principal as possible, and then 3-5 years later refinancing into a 30 yr sounds like a great strategy to cash flow my primary. I ran the numbers and that would work great in 5 years time. I feel like i can do that, and at the same time still purchase an investment property, however it really limits the areas i can afford with about 20K in savings. I have quite a few retirement accounts as well and can pull from there if needed.  I've been looking at the Temple/Killeen area as the price point is something i can work with - not too expensive, and I've seen a few properties that go over the 1% rule. 

My intermediate strategy is to find my first buy and hold property where i can add value either by purchasing at a discount, or rehabbing. Once i get a few deals under my belt and gain experience, I'd like to try and BRRRR properties.

Long term - I'd like to have a portfolio of about 20-25 properties where i can eventually just live off the rental income. 

I see you are in the Austin area..are you familiar with the Temple/Killeen area? i'd love to hear your thoughts on that area for cash flow? Also, do you have any recommendations for lenders that offer favorable terms on a 15 year note? Thanks again for the suggestions! 

Hi Dominique,

Yes, I'm struggling at the moment as well to find a HELOC that i feel has favorable terms. I've talked to 10+ lenders and I'm stuck at the moment. The only lender that seemed promising was Penfed. Where I'm stuck is at the 25K minimum loan amount lenders require..and can't find many lenders that will go below that amount...and the ones that do have much higher rates. Thank you for responding!

Hi Jody,

Thank you so much for your suggestions! I've definitely thought about getting a duplex and house hacking, but unfortunately in the Austin area multifamily properties are just out of my price range easily going 275K and more. I feel like there could be some good buy and hold opportunities in the towns around austin, but still would need a cash out refinance or HELOC to make it work. You made a very good point about paying double interest with the HELOC and is something i need to consider. My goal would be to pay off the HELOC in 2-3 years, or maybe even refinance the investment property after a minor rehab to pay off the HELOC. Lot to think about. Thanks for taking the time to respond. Much appreciated!