All Forum Posts by: Sasha Mohammed

yep, that conventional 15% down on a duplex is rough. Another thought -- may be a tougher find, but how about an SFR with an ADU? that gives you the conventional terms of an SFR (5% down) PLUS the cash-flow of a secondary unit. you might find this actually to be cheaper sales prices than duplexes, albeit they are tougher to find.

there is hope! don't give up!
Sounds like your issues comes down to misinterpretations on the selling side and a competitive market. FHA does give you added protections as the buyer, which a lot of sellers are not liking (namely, they want guarantees on purchase price regardless of appraised value, and FHA will allow you to walk without penalty if the home doesn't appraise). FHA is also more stringent on property condition, and in this crazy of a seller's market, sellers dont want to make repairs to accommodate an FHA appraisal.

For these reasons, a lot of sellers agents are putting FHA and even VA offers at the bottom of the pile. Thing is, FHA has always had a negative connotation, its just exacerbated now due to the feeding frenzy. I have successfully closed FHA purchases recently; my only suggestion is make sure you have a great agent. Happy to refer you to someone in your area if you'd like. just say the word!

@Kevin Luttrell im not sure where you read that i said it rarely makes sense. What i did say is that it should be compared side-by-side with FHA to determine if it does make sense.

i just ran a 3% down in our market (OC, $850k pp) through loan sifter, 3% down conventional LPMI ends up costing $100 more per month than a 3.5% down FHA. any given day, any given lender, any given scenario would garner different results. BPMI would give different results. even every buyer with a different goal in-mind would have a different opinion on the matter.

All i'm trying to say is you can't make a generalization in any case, and the only way to find out for sure what the best option is is to crunch the numbers.

@Michael Plante home possible and home ready both do 3% down, but its a thin needle to thread through because they have income caps to qualify for it, which typically do not align with income minimums needed to meet DTI requirements. plus the rates and MI are so high right now on those, its kind of a moot loan product in today's market. not impossible, but very difficult.

@Evan Swanson if you're using a broker for a consumer loan, you shouldn't be paying the broker's fee; the lender pays the broker on consumer loans. there's also caps on how much total points and fees you can be charged on consumer loans. so.... yes :) definitely worth it in your scenario. 

no, its not always the case. and especially depends on which lender you go with, and when. FHA should have lower rates than conventional, but a lot of retail lenders pocket those margins and offer roughly the same rates for FHA and conventional. Also, right now, most lender's are not wanting those 3% down loans, so they jack up the pricing significantly to deter you from wanting one too. 

Personally, i dont put any of my clients in a loan i wouldn't put my mother in, and if this was her dilemma, i would recommend she come up with the additional 2% and go 5% down conventional (even by way of gift funds). 

The only way to find out is to compare side-by-side. i would recommend you call a broker, though, as opposed to a retail lender (avoid the quicken loans, lending trees, and loan depots of the world). 

i would recommend you reach out to @Alex Bekeza! if he can't help, then I'm sure he could point you in the right direction. 

if you're going duplex, FHA is not a bad option. 3 and 4 unit FHA has an added guideline called "self sustainability" or something along those lines. this won't apply to you, making an FHA loan a great option! Essentially, since this is a live-in-rental, i would run both options: FHA and Conventional, and compare side-by-side. there are some pros to FHA (rates are typically much lower, down payment requirements are lower), but obviously come cons as well (that pesky PMI you mentioned). I would look at both options and compare monthly payment. if FHA gives you the flexibility to do a lower down and keep the cash-flow the same or roughly the same, then the only other thing to consider is your starting-equity. remember that the PMI is not only a monthly, but also an up-front (and typically financed) fee. even if you put the same 20% down on both scenarios, you're starting out with slightly less equity on FHA. lastly, FHA will be much stricter on property condition, so if you're looking for a value-add, may be best to go conventional to avoid appraisal issues. Hope this helps!

yep! what @Reid Chauvin said! sounds like conventional financing to me. There are other loan options that do not go to fannie/ freddie, which would allow for lower down payments. BUT! that typically also means higher risk for the lender, which translates to higher rates and fees for you. it's all a trade-off. 

yikes! that does not seem like an easy situation. While I completely feel for this person and their daughter, you have rights as the property owner. i would start by reviewing the laws in your specific state. once you know exactly how you can proceed legally, i would suggest you start with a friendlier approach. not that it's necessary, but maybe ask the agent to help them find a replacement rental. maybe you offer a small cash-for-keys, just in good faith and understanding. not saying you HAVE to, but you might find it way easier to vacate them with some kindness and compassion, rather than playing hardball. if that doesn't work, then take the necessary steps to vacate them through legal means.