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All Forum Posts by: Derek Brickley

Derek Brickley has started 6 posts and replied 470 times.

Post: Lending Question for Consecutive House Hacking

Derek Brickley
Posted
  • Lender
  • Ann Arbor, MI
  • Posts 490
  • Votes 185
Quote from @Daniel McDonald:

Going to depend on the lender. A few told me I wouldn't be able to use an FHA again because my properties were too close together (i.e. less than 100 miles apart). Another lender told me I could write a letter for any reason and he could get it approved, which he did. My excuse, I needed more space because I was remote. Now my route yes was a plead for more space (even though I went from a duplex to a duplex) so just find the right lender and get creative:

-I want to be closer to work

-I want a home office 

-the house is haunted

-My neighbors scare me

-I'm trying to start a family

-An in-law needs to live with me

Find the right lender and this won't be an issue.

Absolutely!  Just need to justify it and certain lenders may want some sort of proof like a vacating lease for the property but it can be done.  It has gotten harder as underwriting guidelines have gotten stricter over the past couple of years due to an increase in occupancy fraud though.

Post: Lending Question for Consecutive House Hacking

Derek Brickley
Posted
  • Lender
  • Ann Arbor, MI
  • Posts 490
  • Votes 185
Quote from @Justin Brown:

So the will be looking that the occupancy makes sense … I’ve been in lending 22 years and run a mtg co, was an underwriter for a while

basically you won’t be able to do a lateral move because then it will be obvious your building a portfolio and it’s an investment, so yea the lenders telling you it needs to be a move up are correct for the most part 

but closer to work is considered a motivating factor and would work, so ideally I’d buy the first one on the outskirts of max distance you’ll be willing to commute , then find one closer to work with small sf .. it’ll make sense your moving closer to work

if from there you buy units that are larger in sf, and still similar or closer distance to work, that’s considered a move up going from a 4 unit to 2 unit , from units to a Sfr, all of that would be considered a move up 


going l from attached to detached, relocating from work, it just has to make clear sense for your motivation to buy and occupy the new p property other than simply adding to your portfolio 






Totally agree Justin, tons of ways to justify it and so it just needs to make sense!  Occupancy fraud over the last few years skyrocketed and so there is a huge increase in surveillance on situations like that.

Post: Who's still bullish on crypto?

Derek Brickley
Posted
  • Lender
  • Ann Arbor, MI
  • Posts 490
  • Votes 185

Hey Chris!! You never can tell, but I’m confident at some point BTC will have a revitalization whether that is speculation or practicality.  It’s just more important now than ever to watch whom you trade and hold with.  I got stuck in the BlockFi mess and didn’t lose a lot but still.

Post: Conventional vs. FHA for Househacking

Derek Brickley
Posted
  • Lender
  • Ann Arbor, MI
  • Posts 490
  • Votes 185

Love it!  All great information.  Thanks Brad!  Huge incentives too conventional with HomeReady/HomePossible for those under 80 AMI.  Never a better time to get into investing with a househack!

Post: Using rents as income for 5% down

Derek Brickley
Posted
  • Lender
  • Ann Arbor, MI
  • Posts 490
  • Votes 185

Are you currently renting a place now?  To use that rental income on this program, they will require 12 month verification of rent.  If you are living with no housing expense, then they would not be able to use that as income.

Post: Using rents as income for 5% down

Derek Brickley
Posted
  • Lender
  • Ann Arbor, MI
  • Posts 490
  • Votes 185

Hi Nolan!

Yes, we can use 75% of the rents to help qualify!  That's in most circumstances though.  Would this be a first time purchase?  Or do you currently own?

Post: FHA vs conventional loan

Derek Brickley
Posted
  • Lender
  • Ann Arbor, MI
  • Posts 490
  • Votes 185
Quote from @Ryan Thomson:

I would keep in mind that if you get a duplex, triplex, or quad you are going to have to put 15% down with a Conventional loan. 

With FHA you can get a duplex for 3.5-5% down. Do know that FHA has a self sufficiency test on triplex and fourplexes. In order to pass the self-sufficiency test, you'll need to prove that 75% of the rental income you're likely to receive will exceed the full monthly mortgage payment. If not, you will have to put 15-20% down for triplexes and fourplexes with FHA. FYI there is no self sufficiency test for a duplex.


 Hi Ryan!  

Like I mentioned above many people overlook the FreddieMac HomePossible product where you CAN go 5% down.  Income limits apply but may be a great option for some people.

Post: FHA vs conventional loan

Derek Brickley
Posted
  • Lender
  • Ann Arbor, MI
  • Posts 490
  • Votes 185
Quote from @Andrew Postell:

@Amy Lee I need to provide some clarification on your post if you don't mind.

1. Downpayment - there is no 5% downpayment using a conventional loan with a 2-4 unit property.  A few years back there was, but there hasn't been that option for a while now.  So your options using a conventional loan are 15% down with a duplex as your own primary home and 20% down with a 2-4 unit property. 

2. FHA Rules - now FHA has this rule called the "self-sufficiency" rule on 3-4 units properties. This rule basically states that the rents have to be OVER the mortgage payment. And since rates are so high right now, and properties are so expensive, satisfying the "self-sufficiency" rule is next to impossible. And that means no FHA loans on 3-4 unit properties right now. This is an economic environment problem that will not always be around but be aware of this. Keep in mind that this does not apply on duplexes.

I know that was a lot but feel free to ask anything additional.  Thanks!

Self sufficiency is true but if you qualify under the income limits then you can use a conventional HomePossible with 5% down on a duplex.

Post: FHA vs conventional loan

Derek Brickley
Posted
  • Lender
  • Ann Arbor, MI
  • Posts 490
  • Votes 185
Quote from @Amy Lee:

What would be the perks of using an FHA loan to househack on a multi family home (duplex-triplex)? There's the lower down payment but that makes your mortgage higher, you have to pay the the PMI (I forgot the term on FHA loans) for less than 20% down payment that lasts the life of the loan in my understanding, paperwork can be a lot I hear, and takes longer to close. So the only benefit is the lower down payment which you can do on a conventional loan also. Can someone educate me? Thank you!!

It will depend on your specific situation for sure, but they are very comparable loan products.  The conventional product has income limits, and FHA will be a much better option in general for those with lower credit scores.  With the conventional you would need 5% downpayment whereas FHA you can go 3.5%.   The benefit of going conventional if you qualify for a first time homebuyer product is that you can use that twice and then FHA after for three househacks without having to refinance.  For most people though, the FHA househack will make the most sense.

Post: House-Hacking FHA-Preapproval Calculator

Derek Brickley
Posted
  • Lender
  • Ann Arbor, MI
  • Posts 490
  • Votes 185
Quote from @David Rodriguez:

Very new to real estate and want to create actionable steps towards getting my first home. My goal is to house hack.

I want to figure out how much I can qualify for with an FHA pre-approval calculator. The calculators I have found do not seem to increase what I can afford as they do not consider house hacking rental income. Does anybody know a good tool for this?

Hey David!  I absolutely know a good tool: talk to a lender.  I know it sounds like a cheat answer, but as a lender it’s our job to tell you what you can qualify for and it’s also something you will need to do before you can convince an agent to show you properties (in most cases).  Talking to an investor friendly lender that understands your goals is important.  What state are you in?