All Forum Posts by: Jeff Dulla

@Tom J. I know you are probably looking for a more simple answer but it depends. I would think while rates are still historically low, you want to leverage while you can and save your cash. Eventually, maybe soon, rates will be at a point where it will not be as advantageous for you to finance them. 

It also depends on each property. If you can get a property that is truly undervalued because of structural or safety issues that may impact financing, I would think you may want to use your cash towards those up front, fix the issues, and then get your cash back out. But if you find a property that seems pretty straightforward, just finance the purchase. 

Lastly, most of the time you do a cash offer, you are really removing your mortgage contingency but can still enter verbiage allowing you to obtain financing. In order to aggressively get a property under contract, you could also offer cash, knowing you will pay cash worst case, but in the meantime start the process for loan approval. 

@Niki C. If it is a $300,000+ loan amount, 45 day rate lock or less, 5.25% is what we are quoting today and we are normally pretty darn competitive. So somewhere within that number. Rate is a decent amount higher at 20% down versus 25% down. 

@Niki C. SFH or condo? How is the credit score?

@Dennis J Marsack Not speaking on the legality of any of this but typically, for the investors I see, they close the loan in their name and then move title to LLC after closing. That way they receive favorable, residential mortgage financing terms. You can probably start the LLC (entity) in advance, you just wouldn't close the loan in the LLC's name.

If her credit is in the 600s and you have a 740+, you want to do the loan just in your name. You can put her on title at closing. 

The 401k loan shouldn't be an issue either but you will have to call it a gift and you would need to document her ability to draw on her 401k. Typically through terms provided in the 401ks FAQ page. 

If you do not like the idea of calling it a gift, you may want her on there but you will definitely receive less favorable terms. 

@Greg Grant For your scenario, I would think the cheapest money would be some kind of debt instrument on your primary home. Something that would probably be a great fit would be a bridge loan. 

Zero pressure whatsoever but I can give you details on a bridge loan if you would like to PM me. It is structured similarly to a HELOC but meant to be paid off in a short period of time - when you sell your current primary home.

@Steve C. Echoing what @Chris Mason said. More than likely your talking about a larger building, run by a management company - but behind them the homeowners should be shaping how they want their condo building to look going forward. Some of that should take shape on its own as it will continue to be much easier to finance owner occupied units in the building rather than investment. 

Also, generally speaking, if you have a non-warrantable condo unit, you should be getting it at a discount. If most owner occupied borrowers are balking, slimming the pool of buyers, and condo financing is tough because of occupancy ratio, then you would hoping your getting this under value of similar size units in the area. And yes, your rates going to be a decent amount higher for this product.

@Andy Bondhus I don't know the legality behind any of it but I do know that a lender can offer a program with specific features, in this case escrow, and if you do not agree with it, they do not have to lend. 

I also don't believe there is any federal rule for enforcing escrow but I think there are state by state rules. Ones that back up the idea that if you have less than 20% equity in the home, the bank can require escrows. They also have rules stating once you have 20% equity, they cannot force you to escrow. 

@John Mich I cannot speak for certain because each lender can be a little different or have overlays. But I believe the question that is being posed to you is only because you are doing delayed financing. And that issue specifically has to be vetted for delayed financing. They limit the amount you can take out and also vet out where the money came from (for instance if you received a gift or anything like that). 

Once you wait the full six months and cash out, you can do do so and most banks I know of will not ask for proof of the proceeds used to purchase the home. 

@Account Closed I don't believe that violates anything with FHA as they do allow for what is called border income - if you rent bedrooms out. But to use it for qualifying income, they require those people to be related. If you aren't using this income to qualify then I don't know how it would even come up.

Not sure if there is any provision written in the mortgage that you sign at closing that says not to do this but Ive never seen that. Maybe a real estate attorney would know.

@Samantha A. It's not based so much on just trust as it is documentation. Ideally, as you progress as an investor, you will qualify based on your tax returns. As most investors collect properties, they form an LLC (or multiple LLCs) that will flow through your schedule E on your personal returns. When your starting out, you can also use a signed lease and proof of deposit to prove rental income. To qualify for rent on the property you are purchasing, the appraiser will do a rent schedule to determine fair market rents for qualification.