All Forum Posts by: Gregory L.

The key is you've already run your numbers and identified properties. Once you've completed those steps, it's best to have financing in place before making offers. There was a thread on here a few weeks ago where a new investor like yourself asked similar questions, except he hadn't run any numbers and didn't have a clue about his market. Several individuals were instructing him to just go and get his credit checked (hit) for a pre-approval, which was very poor advice given he didn't know his market. I recommended he do what you've done, and that's learn your market before getting the pre-approval.

Michael Cohen Spencer Glaser Yes, I did come across that. However, I've also seen at least one other lender mention there's a caveat to the rule, and it's what I mentioned above--that if you first leave the current primary and rent it out for a few months before applying for the new FHA loan, then the 100 mile rule won't apply. I'll have to do more research.

Spencer Glaser You should do more research on the 100 mile FHA rule. So far I'm seeing it isn't dead set in stone. For instance, the rule seemingly only applies if you *need* the rental income from your first mortgage to qualify for the 2nd. If you don't need to use the rental income, then the 100 mile rule isn't applicable. Also, it appears the rule is in play should you be directly leaving your current primary to live in the FHA home. So, say you left your primary now, rented it out and moved elsewhere for a few months, and then applied for the FHA loan the 100 mile rule wouldn't be applicable. Do your own research and talk to lenders, but the insight I've provided above is out there.

Paul D. Michael Cohen Since you're both lenders, could you speak on what I've stated regarding purchasing a conventional property with an owner occupied loan, and then trying to finance an FHA owner occupied loan only 4-6 months later? I don't believe either of you have touched on this, and in my experience with contacting a large number of lenders, this would be a glaring problem.

Spencer Glaser , Was your conventional loan primary, or investment? If it's primary, then you could have some issues because to lenders it'll look like you're acquiring investment properties with owner occupied loans. You're perfectly fine if your first loan is non owner occupied. Otherwise you'll have a lot of difficulty getting approved, especially with it being only a few months since your first purchase. Lenders normally want to see at least a year gap.

The suggestion wasn't to not get pre-approved. The suggestion was that is not the first step, and it isn't. Simply telling the guy, who's new, to just go out and get pre-approved without first either asking the necessary questions, or advising him to ask the necessary questions, is irresponsible in my opinion. I'll reiterate, if what he wants (a multi-family) either isn't plentiful in his area, or costs far beyond what he can pay, it's absurd and a waste of time to get a pre-approval. It'll serve no point, only for him to find out he's approved for 475k, when the properties he wants in his area are 975k. He can find this out on his own. That's why they have mortgage calculators, or pre-qualifications (*not pre-approvals*) available for these type situations. You don't just go get pre-approved without knowing a thing about your market. In my opinion, that's poor advice to give a new person who seems to know little about real estate or the process.

I think there's a little misinformation in the thread. Joseph, the above responses would be closer to accuracy were you buying a single family home via a conventional mortgage. However, you said multi-family, and no you can't purchase a multi-family with a conventional loan and only put down 5%, even if it's owner occupied. They'll want 20-25% down. Also, you'll be better off waiting until you've been in the FHA home at least a year, and not the 8 months. Lenders want to see at least a year, unless you have a very good reason for wanting to buy another property so soon. Plus, would you be refinancing the FHA loan into a primary conventional? If so, then you'd need to wait another year after refinancing. Otherwise you risk the new conventional lender believing you've committed fraud, and the new FHA lender for the multi-family questioning why you've just refinanced into a conventional loan as primary, and now you're trying to purchase a multi as primary as well.

I'll reiterate that you should not just go and get pre-approved. That's not the best course of action. First you need to find out what you can afford to pay, and then check listings to see if what you want is available in your price range. It's completely pointless to have a lender check your credit and go through the trouble of submitting all the documents when you don't even know your market and if what you seek even exists.

Chris, In short, A pre-qualification is when a lender can give you a rough estimate of what you'd be approved for *based on what you tell them*. You'll provide your income, assets, and all monthly debt requirements (generally all found on your credit report). This is when you haven't provided your SS# for them to check your credit, or proof of your income/assets. It's all based on what you tell the lender. A pre-qualification is also basically useless should you want to actually place an offer on a property. It's simply preliminary. A pre-approval is when they formally check your credit, and actually receive documentation from you about income and assets. This is when everything is being proven.

There's a difference between getting pre-qualified and getting a pre-approval. I'd always recommend getting pre-qualified, but I do not agree with those stating to go and get a pre-approval. Too many factors that we don't know could result in a pre-approval on you being a waste of time and an unnecessary hit to your credit. Before even talking to a lender, you need to know if you can even afford what you're looking for in the area that you want it. I can certainly want a 4 unit multi-family in a specific area, but if it'll cost me $900,000, and the max I can pay is $1500 a month, then why am I going to get pre-approved? There's no point, so that's not the best advice. It sounds like you don't specifically know what you want, where, and what you can pay. Determine these things before doing anything else. Otherwise you're only hurting yourself. Also, if you're just starting out most lenders won't include any future rent in their approval process, so don't expect that.