All Forum Posts by: Eric Veronica

@Ashley Herron Yes you should be able to refinance.  The question is how much cash you will actually be able to get out.  If the home is worth 85k and you currently owe around 60k there isnt much room to pull money out.  Most lenders will limit cash out refinances on investment properties to either 75% of 80% of the homes value.  Based on the 85k value you would be looking at a max loan amount in the mid-upper 60's

It can be challenging.  Make sure to speak with the lender up front.  

As long as the two properties on one parcel is legal within the local municipality AND there are other similar comparable sales that the appraiser can use then you are off to a good start.  

There are quite a few of these in the Cleveland area which we close regularly. 

A lot of lenders have overlays for using new rental income which limit buyers ability to qualify. 

We use new rental income even if it is not on your tax returns however a lot of lenders will not. 

an easy NO!

Moving title to the LLC does not change your debt to income ratio. The loan is in your name and will show up on your credit report. Whether or not the title is in your name or the LLC is irrelevant because the mortgage is still in your personal name.

I am assuming from your question about DTI that you are asking about DTI restrictions when you are planning to purchase a handful of properties over a period of time. They way around this is pretty simple. You just rent your property out with a 12 month lease. Conventional guidelines allow you to offset the mortgage payment + property taxes + insurance if you have a lease. In high cash flowing areas, like the Midwest, you can usually use the rent to offset the entire payment.

For example, lets say you purchased property 1 in January.  The monthly principal and interest payment is $750.  Then in February you have a tenant sign a lease for $1200/month.  

Then lets say in March you go under contract to purchase investment property number 2 and you apply for a conventional loan. When doing the debt to income calculation we will use 75% of that $1200 monthly rental income on property 1 lease which results in usable rental income of $900/month. This $900 monthly income will completely offset your mortgage payment on property 1 and even give you additional qualifying income of $150 per month

On property 2 mortgage your DTI will actually be lower than it was when you purchased property 1 just two months earlier. You can continue to repeat this process. I have actually had customers purchase ten properties in one year where the debt to income ratio on the tenth purchase mortgage was actually lower than their DTI on their first.

I will warn you that a lot of conventional lenders have overlays which will not allow you to use this rental income until you have owned the rental properties  for a certain period of time.  Make sure you ask your lender up front if they have any additional rules that will not allow you to use the rental income right away. 

Feel free to reach out if you have any additional questions.  

There is a conventional program out there that allows you to qualify with a 5% down payment.  The program is called Homepossible.  

The one very large catch is that your qualifying income must be under 80% of the area median income level.  This disqualifies a good portion of potential buyers across the country.  Especially those in areas where home prices are high because if your income is below 80% of the area median average then you are unlikely to qualify for a mortgage. 

With that being said this program is still being used in lower cost areas throughout the Midwest and South.  Within the past few months we have closed 5% down multi units in Ohio, Michigan, Indiana, and Alabama.  

I dont know if i would say that it is a bad deal.  More that different lenders have different sensitivities to the highest rates they think they can sell on the secondary market.  It seems like your lender might be a little more sensitive than others.  Right now there are a lot of lenders that cannot price an investment property without paying points but that is because rates recently spiked again.  A couple weeks ago your lender may have not had any issue giving you a par rate. 

This can be true in certain cases.  If you are putting less than 25% down and your score is in the average range then you may not be able to get a convention loan with out paying points. 

Couple examples for my specific rate sheet assuming a single family investment purchase 

25% down - No point option is available as long as your credit score is 680 or higher

20% down - No point option is available with a credit score of 760 or higher 

15% down you are going to have to pay points regardless of the credit score 

These figures above are lender specific. 

@John Warren  lol... good one! 

Hi Robert, 

For conventional loans we do not have a minimum loan amount in Ohio.  Feel free to reach out if you have any questions.