All Forum Posts by: Jay Voorhees

There's a corny saying lenders often use which is "marry the house and date the rate". If the seller is providing a credit then go for it. However, if you are buying down the rate with your own funds, you will definitely want to look at the break even point and consider a few external market factors. A lot of major economists still predict rates will fall within the next 12 months. Something I don't see talked about as much is China's currency crisis. They are currently experiencing bank runs en masse and clients refusing to make payments on their loans en masse. Either issue alone could easily collapse a banking system, and if China is unable to fend off the collapse, it would be horrible news for the world economy and cause severe economic hardship for anyone who relies on them for trade and commerce. This type of terrible news is what would bring rates down in the US (as negative economic news always does) along with all the capital that moves to the US in order to escape the risks posed by a potentially collapsing economy. All that to say, it would be horrible for the broader world if the Chinese are not able to fend off such a collapse, but we would likely see rates drop. Therefore there is a strong chance you will have the opportunity to refinance into a lower rate (at no cost) in the next year and paying points now would not benefit you. 

There is a benefit to assuming an FHA loan in a rising rate market. However, you must qualify for the FHA loan in order to do this. This includes agreeing to occupy the property as a primary residence as David mentioned above. If this is strictly an investment purchase, you would need to buy the property and take on a new mortgage.

Hi Clayton - a few thoughts here:

1) Conventional loans will add back depreciation when looking at rental income. These include insurance, mortgage interest, real estate tax, depreciation, amortization, and any HOA dues and can be added back to the NET of what you reported on tax returns. If you are looking positive after this, I'd recommend having a local lender run numbers for you as you may be able to qualify

2) While the $90k from your wife may not qualify alone with what you are looking for, paired with the rental income, it may push you where you want to go. 

3) Future rental income of the subject property can be considered for conventional financing if you chose to purchase it as an investment instead. Ideally, this would mostly offset the future PITIA of the property you are looking to purchase. 

4) Unfortunately without a 24 month history of 1099 income, you cannot use this toward qualification. 

5) See if another family member would be willing to cosign with you (as mentioned above)

Best of luck!

Hi Ellie - This is not possible for an agency (Fannie/Freddie) loan. You would likely need to work with a private lender. Gifts are not acceptable for investment purchases (and from interested parties at all) and a loan would not work bc your required CLTV (combined loan to value ratio) still needs to be 75% or less. This would keep you at 100% CLTV.

Hi Lauren - I want to add that 2% is a great rate too - over 3% below market - so that should allow you to build equity even faster.  In addition, by getting a loan from your Mom you are avoiding lender fees as well.  And finally, your Mom is avoiding real estate commissions by selling to you, so you might negotiate a discount in light of that (making the deal you are getting even better).  It sounds like a win/win for both you and your Mom though. 

Most lenders will treat your AirBnB like any other investment property and require 20% down at a minimum.  If your down payment funds are limited and you own another property, you might consider getting a home equity line of credit to garner additional cash. 

Hi Allison, I am going to echo Miranda above and suggest that you find a highly rated mortgage lender via Yelp or Google reviews, or from a Realtor referral.   It is likely that the rates on your existing properties are lower than the rates available in today's market, so it would not be prudent to do "cash-out refi's" and pay off lower-rate loans.  In addition, the interest rates associated with purchase money mortgages tend to be much lower than those associated with cash-out refi's.  The exception would be if you are taking cash out from your primary residence. 

Hi Zachary - no lender should ever charge you an application fee or anything else.  And - in this market, most lenders will welcome the opportunity to pre-approve you for free in exchange for the opportunity to handle your financing when you do get into contract.  Getting pre-approved in this day and age should be pretty painless too if the lender is competent.  

DSCR lenders tend to be pretty flexible, but I would get pre-approved with a reputable lender first before doing anything. If the lender insists that all down payment funds come from your account and that they be "seasoned" (in your account for two months), then I would get the money upfront from your investors.

More importantly, when you are comingling funds from friends and family, you need to be very careful in case your investment plans go awry.  You will need to account for all funds to the penny for various legal reasons, in case your friends or family members come after you.  I would in fact spend a few bucks to pay an attorney to draw up all the agreements to protect yourself.   I saw a lot of people get in trouble with arrangements like what you are discussing above after 2008 - when the market corrected.  

You have no financial obligation at all - unless you have given the lender your credit card info for an appraisal and signed disclosures that allow the lender to order the appraisal.  We have borrowers come to us all the time for rate quotes and comparisons, and we are happy to provide them free of charge.  If they end up going somewhere else for any reason, we never charge them and would not be able to if we wanted to.