All Forum Posts by: Julee Felsman

@Greg Moran Any idea what their price range is? They'll find a multitude small towns to chose from around the Portland Metro area. 

A few towns they might want to check out:

White Salmon, WA / Hood River, OR - These towns are across from one another (and there a bunch of other smaller communities nearby) with so much going for them. 

Downtown Vancouver, WA - I love the Hough and Arnada neighborhoods for walkability.

Astoria, OR and the northern OR Coast (Seaside, Warrenton, Gearhart) - winter weather might be a little much for them but Astoria is so charming. (Goonies was filmed there!).

Central Oregon Coast (Newport, Lincoln City, Neskowin, Pacific City) - again, winters are a little stormy/rainy, but great little (or in the case of Lincoln City, medium-sized) towns. 

Newberg, Dundee, McMinneville, OR - The Oregon Wine country... small towns with an increasingly Napa/Sonoma vibe.

Portland Proper - Nearly every neighborhood in Portland is like a little "town". Multnomah Village in SW and St Johns in N PDX are especially "small-town-like", but Alberta, Hawthorne, NE 42nd, Montavilla, Sellwood/moreland, Woodstock, etc... the list goes on. 

Troutdale, OR - Gateway to the Columbia River Gorge with a lovely little downtown.

Longview, WA / Kalama, WA  / Ridgefield, WA / Battle Ground, WA - depending on price point there might be some more affordable homes in these areas. (Not to say there aren't some spectacular properties at a higher price point too.)

Further from Portland:

Ashland & Medford, OR - Southern Oregon, Ashland is a great little college town with (when it opens back up) the amazing Oregon Shakespeare Festival.

Bend, Sisters, Tumalo, Prineville, Redmond - Oregon's high desert. Bend's gotten very costly, but lots of smaller towns at a less crazy price. 

I'm sure others can chime in. Caveat, I'm a lender, not a realtor... but I get around a good bit and finance homes in all of these communities. :)

Julee

@Mary Jay FHA is probably your best bet. FHA allows as little as 3.5% down.

FHA has no restriction on owning other real estate. In fact you can even have more than one FHA loan at a time so long as up meet one of a few criteria (one of which is moving to a new area at least 100 miles from your other FHA-financed property). 

FHA did recently change a guidelines in an important way when it comes to using rental income when figuring your qualifying income for a new loan.

It used to be that lenders could add 75% of the appraisers opinion of the market rents for the other unit in a duplex to your qualifying income. Now the rental income must be reduced by 25% (from 75% to 50%) unless you can show you have at least 6 months of the loan payment (including taxes, insurance, mortgage insurance) in "reserves" left over in savings after closing.

And this rule applies to your other real estate too... to use rental income to offset those payments you must either show 6 months of reserves or show that you have a history of rental income on the property and have received the previous two months of rental payments.

Hope that helps!

Julee

@Jason Keating Any reason you're going non-conforming? 

All the notes above from @Stephanie P. and @Andrew Postell are spot on -- not too bad for a commercial or portfolio loan. But can you go Fannie/Freddie instead?

I just pulled pricing up for term that align with what you described above and with slightly lower costs and got a note rate of about .5% lower that you've been quoted (assumed 730 fico, single family, investor, cash back, 75ltv). Alternatively the rate you've been quoted would be closer to 1.4% in points with about $1300 in other lender fees. 

And the closing costs vs. prepaids has been covered well above, but I can resist adding my two cents... I find it useful to think of closing costs as “that” costs and prepaids as “when” costs.

The closing costs are “that” costs are things that you pay because you are refinancing. They wouldn’t happen if you weren’t refinancing. When making a cost/benefit analysis of a refinance for a client I always focus on these costs. 

The prepaids are “when” costs. These things that you would pay whether or not you refinance, but the timing of when you pay them is impacted by setting up a new loan -- these are taxes, insurance and interest. You’ll pay a month of interest at closing – this interest takes the place of a monthly payment (you’ll skip the next payment after you closed). If your new loan has an escrow account, you'll also make a deposit to set up a new “escrow” for taxes and insurance at closing.

You don't have an escrow current, of course, because you own the property free and clear. If you did, the new escrow would just be replacing your old escrow account (the balance of which is generally refunded about three weeks after closing). In your case, you can just think of setting up the escrow as getting ahead on costs you would have been paying out of pocket, down the line, when taxes and insurance next come due. 

Julee

@Jay Hinrichs 

The UST was pretty simple to pass, although by the time I got around to taking it (a few years ago, when I wanted to start adding licenses to my long-time OR/WA), I had to redo the initial 20 hours.

A few states require the 20 hours within X years of requesting a license from them (3 is common).The hardest state is Utah. Because I'm the branch manager, I had to take a 40 hour PE before I could apply for my license AND take a proctored test on just Utah law. Got that one knocked out this winter.

Now I'm just waiting for NY to get around to processing an application I submitted 4 or 5 months ago and I'll have collected the whole set. I actually have an sticker map of the US at my office (you know the kind you see on RVs?). Just itching to put that NY sticker on there. :)

My annual CE for all states is about 29 hours for all the stages plus 8 hours for Federal. So it's a commitment. But I do keep up on all the regulations that way, so not a bad task to have to tackle. 

@Jay Hinrichs @Shannon Robnett 

I need to update my signature with a few more licenses... I'm licensed everywhere but NY (license submission is pending in NY... they're been slow). 

CE is a slog... but a girl's gotta have a hobby (mine is collecting state licenses... and rentals). :)

Hi @Shannon Robnett!

Lenders handle natural disasters in a really orderly way:

If the appraisal is not yet completed, we just let the appraiser do their thing. If there are issues, they will comment on the condition of the home. 

If no appraisal was required or the appraisal is already completed we order what we call a DAIR... a disaster area inspection report. I googled up random example here. 

If the property has been damaged in a way that impacts the value, marketability, safety or habitability of the home, we can't the loan until the damage has been repaired. Really the only exception for financing a house that has sustained damage would be a renovation loan.

I'm in Oregon so I ordered many dozens of DAIRS on homes in counties impacted by our forest fires this summer and fall. And I'll be ordering one this week for a client's purchase in Texas slated to close next week. 

Julee

@Jimmy Lieu And a quick addendum. I just noticed I had to/from flipped in my mind. In Ohio your DTI won't be nearly as out of line as it would be in Portland. (I'll defer to the real estate brokers here, but thus far all of my clients buying in Ohio have spent tremendously less per door than my clients in Portland.)

@Jimmy Lieu, if you're going to live in the property the rules are quite different for SFR vs multi-family.

For 2-4 units, 75% of the appraiser's estimation of the market value of the other units will be added to your income. You'll be presumed to be moving into the biggest/nicest unit.

For SFR you can only count rental income if you are receiving rent from a live-in aid (if you are disabled) or under certain special programs HomeReady and Home Possible. Boarder income (or income from an ADU) can make up no more than 30% of your qualifying income. To use it you have to be able to demonstrate you've received income for at least 9 of the prior 12 months and that your boarder will be moving with you. An average of actual income (capped to the 30% number) gets added to your income before your DTI is calculated.

if you buy a place with an ADU, we can ask the appraiser to tell us the market rents for the ADU and use 75% of it (capped to 30%) as part of your income.

Fannie has a nice explainer PDF here.

Now for the bad news: Unless you get a raise with your transition to W2 status, your DTI is probably going to be quite high relative to qualifying for a property in Portland. An owner-occupied purchase is going to be tough without more income.

SFR with an ADU will probably work best. If you're looking at multi-family try to look for the very lowest cost duplex you can... but even that isn't likely to work out numbers wise for a conforming loan without a boost to your pay.

Your DTI is tremendously more likely to work if you can find a nice affordable place to rent and then go look for a property that'll cash flow decently with what you can put down.

No problem, Francois! :) Enjoy the rest of your Sunday!

Quick aside to @Francois G. 

Lenders regularly use education in a related field as part of (even all of) a 2 year work history. 

It's most straightforward when the degree directly relates to the job: recent med school grad who's signed a contract with  a hospital, engineer with a job at an engineering firm, accountant, RN, etc. But even in fuzzier cases this can work just fine: marketing and communications degree who is going into a customer service or sales position, for example. 

Back in the day, I was a philosophy major... I'd probably not gotten too far using my degree to show a two year history of experience in, well, anything. :) 

But most semi-professional degrees with a related(ish) field work just fine.

And the DTI issues everybody raises are real... but not insurmountable. Once @Jimmy Lieu is paid via wages/W2. I'm working on a file right now for a guy who makes less. He's got a very low housing expense (super-low front DTI) and is buying a rental property so the rents are largely offsetting the PITI. Even his modest income keeps his DTI where it needs to be.

I've even done a few loans for clients with zero income who had no primary housing expense (living with a partner/family), but are financing a cash-flow positive rental property and have little/no other debt. Fannie/Freddie rules for rental income recently tightened a little for scenarios like this, but they still doable if the borrower's situation checks the right boxes. 

Fun conversation... thanks everybody!