Hi all! Thank you so much for helping me last moment. My goal was to put down very little money (FHA: 3.5%) for the best deal possible. Most people think it is impossible but I think you have to plan, be ready to do anything to make it work and select the right professionals. I never realized how tricky multifamilies can be. i do own a single family so I have been through the process. I would like to post my solutions and issues and the lender who finally got it done within 10 days! I have tagged her at the end. These are the painful lessons I have learnt:
1. Ask your mortgage company if they are lenders or brokers?
After I posted this here, I escalated this issue to the head office of the mortgage company. It hit me then that the whole mortgage company has no idea what the rules around FHA multi-families were. Even basic rules. I had asked them if they had the experience and they said yes. Another thing to keep in mind was: they were mortgage brokers and not lenders. This is something I came to know late. Mt previous lenders had outsourced the underwriting and that caused a lot of issues because even the underwriter was wrong dead about a lot of things. This of course caused a lot of issues and pain down the road but it is a good thing to keep in mind. This company in Pittsburg was in business for 20 years and had done loans for my close relatives so I did not even question their validity. I was wrong!! And I shopped around. All the generic advice that people give is sometimes just that : generic.
2. Read the FHA manual.
If possible read the FHA manual. It is quite well written and if you like reading it will open up doors to what you can and cannot do. I was forced to read it because I did not trust my lender. I should have just switched my lender but my real estate agent told me that once the appraisal is done for a FHA loan, the appraisal is attached to the loan and it cannot be resolved.Not completely true. I went to another lender and got it resolved. Also rules around 2 family are different than 3 family.
3. Talk to professionals. Do not talk to your friends. Most of them know nothing unless they are professionals. PERIOD!
4. Even your real estate agent may not know the rules
I used to think that the real estate agent knew everything about lending. WRONG. They may know basics but they have no idea how to resolve issues. They are mediators only for the house/building/apartment but for the real laws around lending only a good professional trusted lender will know.
5. When things go wrong, start looking for options at the first red flag:
I did that at the last moment but I was lucky. My deal was really good and I did not want to lose it. Also the seller was extremely nice which really helped my situation. But in most cases sellers have multiple buyers and they may move on. I should have switched my first lender at the very first sign: the appraiser had posted the viability of the house as 15 years instead of 55. And the lender never questioned the appraiser.
6. Not everyone knows about FHA laws/rules:
I thought that every lender was well versed with it but again I was wrong. The quality of the lender does not always comes from online reviews but I think it is a err and trial. My previous lender had excellent reviews but he could not execute anything.
However I wanted to post this for everyone especially the newbies who want to do very little downpayment and enjoy the upside as an owner occupied multifamily. I would really like to thank @Melanie Arroyo for making the lending process smooth. She gave me an excellent interest rate too! I think this loan could not have been done with out her. I was served a TOE notice from the seller but she closed just in time:10 days after I transferred my FHA loan. She took care of it from there. Thank you again to all who have contributed! I have finally moved into my new place.
