All Forum Posts by: Eric Veronica

HI Joshua, 

Physician loans can vary  from lender to lender so I will speak to my physician loan program at First Federal Lakewood.  

He can use a the physician loan with zero down to purchase a new home.  In order to cover closing costs there are a couple different options.  We will allow to the physician to take a slightly higher rate and recieve a lender credit from us.  If you increase the rate by .20% then we will provide you with a lender credit equaling 1% of the loan amount.  The physician could also ask the seller to contribute 3% of the purchase price to offset closing costs. 

Our physician loan program is eligible in 14 states but unfortunately NY is not one of them.  Pennsylvania is eligible but that would be at lease an hour from Buffalo. 

 Interest rates are the same as any cash out refinance.  They are slightly higher than a purchase mortgage but not a huge difference.  Roughly .30% increase.  

If the property is in an LLC then the common practice is to quit claim the deed to your name at the title company, close the loan, and then immediately after closing you can quit claim the title back into your name. In order for this to work you must own 51% or more of the LLC you are deeding the proparty.

If you want to wait 6 months then you can get a cash out refinance pretty easily.  If you are not interested in waiting 6 months this is pretty do-able with a delayed financing cash out refinance.  

If you wish to finance the property in your own name then have your family member lend you the 70% that you need to purchase the home.  Create a promissory note between you and your family member.  Close the home in only your name.  Then use the 30% you have in addition to the loan from family to purchase the property with cash.  After you close on the home you can start the mortgage application for the cash out refinance.  When you close the cash out refinance the proceeds  will be used to pay off the family lender who let you borrow the funds.  Any excess funds will be given to you. 

IMPORTANT CATCH.....If you are looking to close the loan before you own for 6 months then the loan amount cannot exceed the acquisition price plus closing costs. For example, assume the home purchase closes on February 1st with the original purchase price plus closing costs of $50,000.  Then a month later you are are trying to refinance and the appraisal comes back with a value of $100,000.  Since you have not owned the property for 6 months you will be limited to a max loan amount of $50,000 (plus closing costs).  If you wait to close until August 1st you will have 6 months ownership and you can pull out the full amount.  Currently Fannie Mae allows cash out refinances up to 70% of the appraised value on 2-4 unit investment properties and 75% on single family investment properties. 

I can answer number 1 but not number 2

The AMI is based on your current "QUALIFYING" income.  For example, assume 80% of AMI is 90k.  You make a base salary of 80k and commission of 20k resulting in total w-2 income of 100k.  If you qualify for the loan using only the 80k base income then you will be eligible for Homepossible however if you need the 20k bonus to qualify then you will not be eligible for Homepossible becuase your qualifying income will exceed 80% of the area AMI.  

We can go down to 40k on conventional loans in SC. 

I guess the question is why are you reaching DTI limits? All your properties seems to be cash flowing positively. By the looks of it your debt to income ratios should be lower now with you owning these 5 properties than it would be if you didnt own these 5 properties

Fannie/Freddie conventional guidelines require a larger down payment for 2-4 unit properties.  15% down for a duplex is the norm.  You may be able to find portfolio options with lower down payment requirements.   

There is a conventional program called "Homepossible" which can be approved with as little as 5% down on a duplex.  The big catch with this program is that is requires your qualifying income to be below 80% of the area median income limit.  Since you are looking at 650k purchase price it is unlikely that your income will be low enough to be under the limit and still qualify for the loan from a debt to income ratio standpoint. In some parts of the country this is a valuable program but not in high priced coastal markets.  

My answer was for conventional loans btw. 

If the 2nd unit above the garage is a legal accessory dwelling unit then you should be able to use two leases.  If the accessory dwelling unit is not a legal then you might not be able to use a 2nd lease. 

@Sanat Bhandari Based on that scenario you would be limited to a loan amount of $120,000 + closing costs/prepaids so a loan amount of roughly $126,000.  There would be no seasoning. 

If you are looking for a loan of $144,000 then that would result in you getting roughly $18,000 back at closing which would make it a cash out refinance.  That would typically require 6 months seasoning for a conventional loan.