All Forum Posts by: Ryan R.

See if you can negotiate a seller carry for a few years (your close to 10% down) to give you the time to qualify for FHA or Conv loan in 2-3 years.

Most elderly people in that situation like having an income stream to supplement their retirement and is why they still own rental properties and converting from landlord to lien holder would alleviate the hassle of them having to do improvements and repairs, this could also offset some/most capital gains as well. If she is giving her 70 yr old son the home, he would probably also like the income stream and might even make for a good longer term loan option for you. Owner carry or Contract for Deed seems like a better option for both of you in my opinion, rather than a lease option, but this could work as well. 

Like Jason mentioned, get some referrals to a couple of good loan officers in your area, talk to them about your scenario and strategy, find one that you trust and can build a relationship with and discuss with them how you can make sure to set yourself up to qualify for a loan income wise, best to do this before you file your taxes this year as your tax preparer may be looking at best refund vs best way to show income that a lender will use on your schedule c & e, also please do not forget to use depreciation on schedule e if you can, depreciation is a deduction that can be added back in to your income, I have seen a lot of schedule e's that do not have this deduction when they should have.   

PS. With standard conventional financing you can expect that most lenders will use the LOWER of the appraised value vs the purchase price (plus actual cost of improvements) during the first year of ownership to determine the LTV and loan amount. However, there are Alt A lenders out there that can offer rates that are close to conventional rates that will use appraised value after 6 months ownership and will also use the Debt Service Ratio of the property rather than your personal income just in case you have DTI issues.

If you are just trying to find an estimated cost to refi with a traditional lender, you can either just call a local lender and explain the situation and ask them to provide you with their customary costs or a fee sheet or see below for some ballparks of what to expect. 

When it come to points and rate these will never be accurate until you are ready to lock as the rates and points will vary on a daily basis, but lenders do have standard hard costs, like underwriting/processing, doc fees, tax service, flood cert, ect. (most lender fees are around $1500-2500 plus cost of appraisal $400-650 including rent survey that will normally be required on an investment property), don't be fooled by "no cost" offers, any lender can offer this by increasing the rate to cover the closing costs, so, when shopping get both a no-cost est as well as a standard cost estimate and compare the cost to the payment savings and how long it take to re-coup the difference between the options, (ie. Cost difference = $3000 and payment difference is $30, then it takes 100 months to recoup the cost difference) sometimes it is a benefit to have the lower payment and pay fees upfront to save long term (if you plan to hold for 10 years or 120 months then the lower payment option would be $600 less over the term you plan to keep property, remember that an impound account is not a cost to include in this calc, you get this money back it is your money and just held by the lender and paid on your behalf) if you are doing short term it may be better to have a higher payment and no cost upfront.  

In addition to these expenses you will have escrow and title costs associated as well, the title is usually based on loan amount but, if I was to just be estimating I would say average title and escrow cost to be about $2500 on average (not knowing the loan size, but if you are under $400K then this will be a decent estimate). Then county recording fees $100-300. Then there is the cost of taxes and insurance, insurance will usually need to be paid in full for a year unless you have more than 6 months remaining on the policy, the taxes may need to be paid if they are due within the next 2-3 months and possibly an escrow account established. 

Hard costs not including points or origination fees are going to run typically $3-5K, 1 point will be 1% of the loan amount and is a pretty standard origination fee for lenders to charge, escrow account set up depends on the time of year you refi, but if you figure 12 months insurance cost and 6 months taxes you will be close. 

$2100 month in rent in SB? You may have the bedroom count, but sqft is very low for that rent, your probably closer to $1700-1800 than over $2000 in that area, maybe north of 210 Shandon Hills, maybe the Del Rosa/Sterling area, San Grogonia area, close to Highland or casino area might get closer to those rents.

It looks like your trying to Finance with an FHA loan, watch out for mortgage fraud, SB has been a hotbed of mortgage fraud in the past and it is much more of an issue today than in the past, not saying they are looking to lock people up but occupancy fraud is one of the most common forms of fraud and lenders do look for it. With good credit you might find 85-90% financing for non-owners occupancy.

@Jessica Roland some of the issue is the loan on the 70k property will be under 50k more than likely, these are more difficult and most lenders have a min loan amount between 50-75k. Small local banks and credit unions are a good suggestion as they will consider smaller loans to help the local community they are in and sometimes have flexibility with portfolio loans.. Also try Cash Call mortgage they have alternative loans for landlords

@Manny Martinez FHA monthly mortgage insurance is typically 0.85% of the loan amount, so you are effectively already paying the rate you were quoted, $200 per month on an $80,000 loan amount would be about the equivalent of a 3% interest only loan, now factor in the difficulty in finding a 2nd mortgage in todays rate environment that low and assuming the refi rate you are talking about is a fixed rate, your $200 extra per month is paying down the balance of the $80k further reducing the effective rate you are paying on the $80k, all while paying about the same effective rate on your existing balance when you combine your rate and MMI... seems like it is a good move to me or at least better than finding a 2nd mortgage.

If you are looking for an agent in the Inland Empire dealing primarily with land contact Jerry Noe with Keller Williams Riverside, he is part of the Robillard team they are one of the top teams dealing with Land in the area. https://www.riversidemarketcenter.com/agent/Jerry%20Noe/9268df09-c452-4b6d-bec7-4d5773188aed/ 

Typically, you just need more skin in the game when starting off, so, 20-30% for first time or newer investors, rates (9-12%+) and fees (2-5 points plus closing costs) will typically be higher as well and after you get a few completed and have the resume, you can start getting better rates and terms. 

Few things, FHA will allow up to a total DTI of 50% including all debt including PITI, 203K loans are available and will finance the cost of improvements (usually contractor is required, no non contractor work allowed or sweat equity), only one FHA loan at a time (unless special circumstances like job relocation, deterioration of neighborhood, ect and you must move more than 100 miles from existing home with FHA loan), you must live in property for a 1 year period (some exceptions are made), you can own other properties and can purchase additional properties with "other" financing (conventional, private and hard money) but during that first year they must be investment properties. Seasoning for refi's is 6 payments completed (it is truly about 7 months/payments) for a streamline refinance that requires borrower to reduce payment or switch from adjustable to fixed or reduce the term, with very little paperwork or qualifications as long as payments are made on time, if you want cash out you will need a minimum of 12 months ownership. Also to refine our of FHA to conventional realistically you need minimum of 12 months to use the new appraised value rather than the purchase price, mostly due to the minimal down payment requirements of 3.5% since you will in theory have no equity to qualify for conventional requirements, but, even if after a year you need to pay MI on the conventional refi, it can be worth it from two standpoints, 1 - you can purchase next home with an FHA loan 2 - eventually the MI is removed on a conventional loan when you have the 20% equity. Hope this helps, let me know if you have further questions, I have been in the Mortgage industry for about 30 years and have done a ton of FHA loans in the past, now doing only Hard Money.