All Forum Posts by: Torrell Palmason

You Absolutely need to live there a year as was stated. Most HELOCs will go up to 90% LTV so you should be able to get one.
This will then bring how to proceed from there, personally I think a good option would be to look at Freddie Mac Home Possible as you are only allowed ownership interest in two financed properties including the Home Possible loan. From what you have said this should fit your scenario. 

Home possible down payment can be as low as 5% on 2-4 unit provided your Credit score is acceptable. There is also a 80% area median income limit to qualify. Unlike the FHA loan which has Mortgage insurance for the life of the loan the Home possible follows conventional guidelines so mortgage insurance can be cancelled at 80%LTV. This loan like FHA is a owner-occupied loan and will require a minimum of 1 year residency. 

Best of Luck!

So I am going to start with loan program type. There are two main loans I would look at FHA and Freddie Mac Home Possible.

FHA requires 3.5% down with a minimum 580 credit score, most companies have an overlay mine is no exception our minimum score is 620. The loan limit for a Duplex in Seguin, TX is $516,750. This allows a non-occupying Co-borrower. However FHA also will have Mortgage insurance for the life of the loan.

Freddie Max requires 5% down and the loan Limit is $702,000. This also allows for a non-occupying Co-borrower. As this is a conventional loan you will have mortgage insurance until the Loan-to-Value reaches 80%. According to Home Possible guidelines the borrower may only have ownership interest in in 2 financed residential properties including the subject property.

As David above me said, there will be a single mortgage that is then split by the borrowers how they choose. You can assign the percentage of ownership between the parties. At the end of the year the CPA will prepare taxes based on ownership percentage.

Best of Luck!

With your recorded income being low it really limits your options to just the Non-QM banks statements. Non-QM bank statements are a Mortgage, no HELOCS will be available as they will always be a full Documentation loan

Hard Money is an option for a flip if you had a down payment. Hard money is only non-owner occupied and is generally 6-12 months term. This is a great option for a flip or BRRRR. We have a Hard Money loan program that given the right circumstances can cover 100% of purchase and rehab. PM me for details.

Best of Luck!

As far as I am aware no lender will do a HELOC without full documentation.

The type of loan you are talking about however is called a Non-QM Bank statement loan and most companies will be able to do this. This loan is used primarily for a self-employed and will require 12-24 months of business or personal bank statements. If it is personal bank statements then all deposits will be counted toward income whereas business bank statements will take only count 50% of deposits towards income. The disadvantages of this loan type is it will be a higher rate than a conventional, Minimum credit score allowed is a 660, 6 months of reserves, and a 80% max Loan-to-Value. These terms are based on what my company does and will vary from lender to lender.

Best of Luck!

 

Are you wanting the the personal residential mortgage to be Owner occupied or non-owner occupied? 

If it is a non-owner occupied property then there are two non-QM options, a bank statement loan or a DSCR loan. You could do both of those in your name or the LLC.

The bank statement loan will take 12-24 months of bank statements from your business or personal accounts. The income will be derived from 100% of your personal deposits or 50% of your business deposits. 

The DSCR loan will take your calculated rental income vs PITI and the Rental income must be equal or 15% higher depending on the lender. No income or employment will go onto the application.

If this will be owner occupied and you don't show enough income on your tax return there is no loan you can get. You could add your girlfriend to title and she could do a no cash-out refi assuming her income will qualify.

Best of Luck!

With you being approved for a 150k loan and have 18k to put down I would recommend a Freddie Mac Home Possible over a FHA. The Home possible requires a down payment as low as 3%. With this being Freddie Mac once your Loan-to-Value reaches 80% you can drop the Mortgage insurance unlike FHA which holds the Mortgage insurance for the life of the loan. Also, in general Conventional will have slightly lower rates than FHA. With the additional Down payment this will boost your purchase power.

Best of Luck!

If you are looking to jump into a new owner occupied I know of low down payment option. The Freddie Mac Home Possible has a down payment as low as 5%. Unlike the FHA this is a Freddie Mac which means the Mortgage insurance can be dropped at 80% Loan-to-Value. This is an option if you own less than two properties including the Home Possible. If your partner and you do this separately then that will be 4 properties under your collective belt. Once your FHA reaches 15% equity in a Single unit or 25% equity in a 2-4 unit you can refinance that into a Non-owner occupied Conventional which frees up your FHA for another purchase. After you do this plan you'll each have 3 cash flowing properties which should allow you to go conventional from there on out.

Best of Luck!

A HELOC will allow you to get up to around 90% Loan-to-Value with some going higher. A HELOC is just a line of credit you can charge off and payback so your balance can remain low as well as your payments. A HELOC has a draw period of 10 years so you can repeatedly use the HELOC and pay it back for 10 years. If you used this for a down payment on a rental and get the property cash flowing you can pay back the HELOC and use it again for another rental or anything else. A HELOC is an adjustable payment and generally the rate is about double that of a Owner occupied refinance. Once you have hit end of the draw period your property should've gone up in value and you will be able to get a new HELOC for a higher amount.

A Cash-out refi on a owner occupied will only go up to 80% LTV. The Cash-out refi is a one time pull on your equity so you will be getting the higher payment and slightly higher rate than a no cash-out refi right off the bat. A Cash-out Refi will have a lower rate than a HELOC and will only be one single payment.

A HELOC is a great option for investors I personally am just always wary of a second payment especially with a higher rate and adjustable payments. However, the HELOC is far more flexible than a Cash-out Refi since it is reusable and you can pay it back with a cash flowing property lowering your overall payment on the HELOC. What it comes down to is what you are comfortable with and think will work best for your scenario.

Best of Luck!

Since you guys are working separately with one FHA each the best option I have found is doing the second deal with Freddie Mac Home Possible which is 5% down with qualifying credit. As with the FHA this in a owner occupied loan so you have to live there a year. On the 3rd deal you should have built 25% in the first FHA so you can refinance into a conventional which frees your FHA up again. At this point you should have 3 cash flowing properties each and from there on out you should be able use to conventional to keep building deals.

Best of Luck!

Well if it's all about getting the max cash out I'd suggest tossing the HELOC and getting a cash-out refi at 80% Loan-to-value which would be 380k then getting the HELOC set-up again as then you can get to 95% combined-loan-to-Value with certain lenders.

If you try to do a cash-out refi on your first right now you will be hit with higher pricing since you have the HELOC which raises your CLTV and you will be able to get less out because of the CLTV limits on the first.

Best of Luck!