All Forum Posts by: Greg Dorn

Oh man I love it, permanent mortgage insurance (not private mortgage insurance, which would be for a conventional loan, MIP or mortgage insurance premium is FHA). Anyways, I think it would likely be worth it but you would need to refinance while still living in the home. You would need to make sure to leave 20% equity in the home (sounded like you were going a rate an term so you would be fine). You need to know what your fees are! Even though you have paid on the house the mortgage balance goes down very slowly in the beginning and fees for refinancing are always a few thousand so your principal paydown may be eaten up with the loan costs. You can get some incidental cash out (1%) and a refund of your escrow account.
BIGGEST THING... do not sign an occupancy certification again. You could get stuck in the house for a year minimum if you go to a big box lender and they stick in an occupancy certification. With just the FNMA loan paperwork you usually wont have one on a refinance but some lenders add them in so read everything you are signing. ALSO, careful about doing the 15 year loans. If you make a lot of money then you can do it but if you dont and you are doing more loans in your name then doing a 15 year loan will increase the minimum payment and 'potentially' reduce your future ability to qualify for more loans in your name. If you take a 30 year mortgage and pay it like a 15 year then you will pay it off in 20 (approximately). Nice part is that your credit report will still list the minimum payment as what was on your original loan or less if the lender automatically recasts the loan to keep the term the same 30 years. 
Again be careful. Talk to someone who is good with numbers and can show you the benefits and downsides of the change with an amortization schedule for both your current and possible future loans (I have a dedicated spreadsheet to do this for clients). Not difficult and you can use bankrate amortization sheets to figure it out yourself as well if you are good with excel. 

Biggest issue I see is the loan is just so small. Most lenders are going to have a 100k minimum loan size and sometimes more. Most mortgage brokers also want a bigger loan because compensation is based on a percentage of the loan. There are some lenders that will do smaller deals but your complicating factor is that it is a mobile home (the llc not so much of an issue especially with non-trid loans). Selling the property to yourself for from yourself to an LLC will not work because any title company worth 2 cents can figure it out most likely. Possibly look at a DSCR cash out loan and take more cash out to get the minimum loan size up. You may check with the lender/broker if you do a principal payment if they will allow you to re-cast the loan to a lower principal balance with the same term.

Hey @Bret Halsey, So most lenders are going to cap your LTV and CLTV on investments at 80%, just not common to go higher and even if they do the rates get crazy because they have a higher risk so they offset it with more interest. I would recommend staying at the 79.999% loan to value to keep the rate down. Even though I do this job for a living the best HELOC I have seen is with PENFED and they will do it on an investment with a rate at prime + 1.5% which is really good. If you keep the line open for 3 years they cover almost all the costs as well.

I would look at that as that is where I am going to get my heloc from to reno my current property and finance the purchase of the next property. Obviously not financial advise, just what I am doing. 

Hey @John Chambers, So if your goals are to acquire more rental properties I would focus on the fair market rent of the property at the highest and base my max loan on the payment (PITIA-principal, interest, taxes, insurance, association dues) being equal to 75% of the fair market rents (at most). You just dont want this property to hurt in the future when you are trying to qualify for more mortgages. The lender is going to hit you with a 75% vacancy of the lease or, after 2 years, the income of the property-expenses (adding back in depreciation). Just do napkin math and figure out what your max payment can be and then you can tell your loan officer what that max payment should be and they will do the math on the max loan amount. 

So signing a home over usually involves working with a title company/attorney to have your sister deed the property to you. This will trigger the 'due on sale' clause of a mortgage so you would, in the lenders eyes, be purchasing the property from you sister. If you are not planning on refinancing then you may want to just be added to the deed with your sister during the initial purchase and work our an agreement with her for how the equity, cash flow, losses, repairs, and such will be split. Good luck. 

Interesting. If you are talking more in terms of syndication (even though it is the 2 of you), a general partner who buys, sells, manages, and everything else is only given a minority share of 20 to 35 percent ownership and the rest of what they get is fees of the transactions. 

• Acquisition fee: 1% to 5%.
• Asset management fee: 1% to 3% annually. (for units I would pay a percent of gross rents). 
• Refinance fee: 1% to 3% of the loan amount.
• Loan guarantee fee: 0.5% to 3.5% of the original loan amount.
• Construction management fee: 5% to 10% of the renovation budget (not given if there is a general contractor used)
• Disposal fee: 1% to 2% of the sale price.

Dang internet issues, Just lost my comment. Hope I get everything back in here for the second time. 

SO, I would agree with @Dan H. in that if you add an ADU (even one) you would possibly and most likely paint yourself into all commercial loans including the DSCR loans. From a lenders prospective the only difference between a ADU and a Unit would be a separate power meter so I would push more in the direction to see if the city would let you add an additional unit to the property. If they are allowing the ADU and you have the space then that would be more ideal.
Otherwise, you want to keep your loan as long as possible so if you want more cash flow I would look at other means of increasing the income since your expenses may be as low as they can go. Have you looked at getting sheds or pavers and renting storage or parking (if there is a need). Just a thought. Interesting scenario. 

I have one lender I work with to do second lines and HELOC loans without requiring the 1st loan be redone. Problem is that the HELOC and Home equity loan in 2nd position both have about the same rate. What is it you are trying to do by refinancing the HELOC? (are you just trying to reset your amortization schedule?)

Hey @Neel P. So I had a loan I was helping a borrower with and the situation sounds similar. Lesson I learned is that I would not rely solely on the fact that you personally did not originate the loan because you did guarantee the loan and so you are personally still obligated to the debt. For my borrower, he had taken the loan out through the SBA because of covid and it was such a large debt that it not only had to be guarenteed by him but they did a lien on his home.

The debt can still be excluded a couple of ways and the most common for FNMA is if the business bank statements show that the business has paid for that debt for the last 12 months then it can be excluded. I would hate for you to get started, have them find the debt and you not be able to close because of it. Plus your application is signed indicating that the debts listed are all of your debts and the information is full an complete. Just make sure you have 12 bank statements from the business showing that you did not personally make a payment on that debt and you can get it excluded. 

Good Luck!

Hey @John C. So when you sign papers for most loans (conventional, fha, va) you commit to live in the home for at least 12 months. The issue you would also face is that if another deal comes up it has to make sense to the lender as to why you need to move again. If the homes are in the same area you would need to buy something with more bedrooms, more bathrooms, more space, a better neighborhood, better schools, OR some reason that is justifiable to the lender as to why you are moving but staying in the same area. If you are moving to a different area you usually sight something like getting a home closer to work. As long as you are doing that you are most likely going to be fine. 
One more thing. If you can house hack with the first property and have leases in place and show rental income you can use that to qualify for the second home purchase but if you are still currently living in the first home and only planning to rent it out you would not be able to use prospective rents and would need to be able to cover both loans within the allowable debt to income ratios. 
Good luck!