All Forum Posts by: John M.

@Bram Spiero 5% down with no PMI on a primary residence? What type of loan was it? I want that lol.

@Patrick Britton  Wow. Thank you for the insight. This is eye opening. I wanted to get clarification on something, as you mentioned investment property multiple times. When you say investment property, do you mean a non-owner occupied situation? If so, what would the differences be in the post you wrote if I plan to owner occupy? Would the down payment requirement be 5%, instead of the 25% you mentioned for an investment duplex?

The 1.75 UFMIP you mentioned, on a $100,000 loan, this means you pay $1,750 just to obtain the mortgage insurance? Is this a prepayment, or just a fee? I noted the word "premium" which leads me to believe it's a fee?

You recommend going to a mortgage broker, I have heard opposing opinions on this, and it's a bit frustrating as they are generally extremely opposing opinions. I do have a mortgage broker that I am working with (who is incredibly intelligent) in addition to getting information from Bank of America. My questions are this: Are mortgage brokers going to portfolio lenders for their "conventional loans"? My broker did quote me the 5% down on a loan, with that higher rate I mentioned in my first post, which matches what you said pretty well. 

To summarize, it sounds like even though BoA is able to provide a better interest rate on the surface, my best option is likely to continue working with my investor friendly broker to craft a loan that fits my needs. 

Thank you for the great responses guys, really helpful so far. I should have clarified, I will be living in the property, and my goal is to reduce my housing expenses to as close to zero as possible while also taking advantage of the benefits of owning a property. 

@Jon Holdman  Thanks for the suggestion on the local bank. I have one in mind that another local investor recommended to me, and I will pay them a visit to see what they can do for me.

@Brian Johnson  Hey Brian, thank you. Unfortunately the location I'm looking for is pretty tough to find a multi-family in at a price where I'd be able to afford 15%-20% down without making myself very cash poor and or selling other investments that I'd rather not sell. At my ideal price point, $200,000, I would need to do 3.5-5% down, especially with these astronomical closing costs that I am seeing. 

@Matt Heath You're situation sounds very similar to mine. My goal is to leverage as much as I can, I just need the numbers to work out with PMI which is proving to be a bit of a challenge in the area I am looking for (near a Downtown area). The properties I'm looking at so far would be short term living situations for me until I'm ready to move on to the next one, just like you. Are you familiar with the requirements of how long you have to live in a FHA loan property before you can move out? Can I proceed to get another FHA loan if I intend to again, owner occupy the property? I'm sending you a PM also.

@Aaron Montague I heard that Homepath is no longer available as of about a month ago. Is that not the case? If it's still available, getting a loan with no PMI sounds like a bargain after hearing what my monthly PMI rate would be otherwise.

I am in the process of loan shopping for my first real estate purchase (2-4 unit multi family). I have gone to a mortgage broker (1 month ago) who initially told me I can do 5% down on a conventional loan and we did pre approval at $200,000. However, the interest rate I was quoted seemed high at about 4.8%. I proceeded to contact Bank of America, and the mortgage professional I spoke to said that the lowest money down on a conventional loan I could get was 20% down on a 2 unit and 30% down on a 3 unit. I have read differently here, so I asked him if that was across the board, or just for me, and he said across the board. We proceeded to discuss FHA as that would be the only option where I could put low money down (3.5%). He provided me pre approval for $280,000 with an interest rate of 3.87% (30 years). However, mortgage insurance seemed awfully high at 1.35% annual fee. This would kill just about any cashflow potential. In addition to this, all of the fees/closing costs seemed so much higher than I expected. My APR came out to 5.4%. My inexperience shines here, but the fact that this is so different from my interest rate means I am paying a lot of fees, right? He even factored in a 2% concession from the seller at closing. Where should I head next? Is it a better option for me to pursue a loan through my mortgage broker, or should I request that the Bank of America officer look into conventional financing for me again?

@Micki M.

Thanks for the tips Micki. You suggest waiting until they vacate to close. Can I write a standard wholesale contract, and just push the closing date out to their move-out date, along with a clause that says if for any reason I cannot perform on the contract I'm off the hook? Eg, push my ability to back out of the deal out to the closing date in January.

I'm wondering how I could expect the seller to be able to move before a closing, especially if they need the funds in order to purchase their next home? In a wholesale deal where the property is occupied, doesn't closing generally occur before the seller moves out?

I received a wholesale lead today that looks good. The price the owner is requesting meets my criteria for a wholesale deal, but the problem is he wants to move mid-january after the holidays are over with.

What do you do with this? Can you close on it asap, but write in the contract that the seller will remain in the property until x date, and they will pay the buyer x monthly? Or maybe just take the value of 2 months of "rent" remove it from the sale price up front?

If this is what you'd do, can you post some sample language that you'd use in the contract?

This is a pretty good deal so I would like to get it locked down as soon as possible, and if there's some language that will allow me to do that, while also still looking for a buyer who doesn't mind waiting ~2 months to flip it, then I think that would be my best option.

@Dave Foster  I meant to tag you above but it looks like I had more trouble with that. Hope you see this as I wrote a few questions above

Originally posted by @Dave Foster:

John, There's actually another possibility that's getting some traction down here in the sunshine state and maybe elsewhere for sure.  Smaller regional banks are lending first mortgages at Heloc fees.  So where a traditional lender might charge you 1-2% origination fee, certain banks (again usually smaller community or regional) will loan 90% on a new purchase for an origination fee of $250 with heloc terms.  In one I just worked on Florida Bank lent 90% for an origination fee of $250 5 year fixed was 3.5%.  7 year fixed was 4.5% and the loan was amortized over 20years.  Might not be for everyone but it's a great option for you to explore given that you're going to live in part and rent part.  Florida Bank would do it up to 4 units.

Dave

Hey Dave, thank you for the suggestion! I like the idea of getting a loan with no origination fees or points. I'm a little bit confused by what you said: "lending first mortgages at HELOC fees." Can you clarify for a newbie?

I was also a little bit confused by the varying rates you mentioned for 5 years and 7 years  with amortization over 20 yrs. This is entirely new to me.

One other question, you mentioned this strategy can be applied to 4 units. Can it be applies to multiple different 4 unit properties, or would this be a one time thing?

@Raymond B. I think I got it! Thank you. I believe my problem earlier may have been that I was using my mobile and the selection went away. Odd.

I did not know about the ability to tag colleagues who had not posted, thanks for the tip!

@Will Johnston So if I did a conventional (which is sounding like the better option at this point), would I have to refinance to get the PMI removed, or could I just request an appraisal once I reach 80% LTV to have it removed but keep the existing financing in place? If I had to refinance, interest rates would change, and my loan term would start over from month 1, correct?

Regarding the HELOC, are these at the same interest rates as the loan, or a higher rate? If so, could I just go the "piggyback" route to begin with?