All Forum Posts by: Trevor Alexander

Hi Juan -

You and your wife could be on the loan as occupant borrowers, and your Father-in-law would be on the loan as a non-occupant co-borrower (co-signer). You would need to be qualified based off you and your wife's credit, and you'd use your Father-in-law's income to qualify. You'd need at least 5% down Conventional, or 3.5% down FHA.

When you can qualify in two years after you file two years of income taxes, you can refinance him off the loan if you wish.

Hope that helps, let me know if you have any questions.

Local Credit Unions are usually pretty solid choices for HELOC's. Steer far away from Bankrate and other online websites. You could check out Symmetry Lending as well.

Hi James -

I think @Caroline Gerardo covered about all of the ideas.

Without knowing your exact situation, it's tough to give one-size-fits-all suggestion. How close are you with your Realtor? Ask him/her to reduce their commission and go ask the seller for a $4,000 credit.

Move closing around to the beginning of the month, and do an interest credit is another option. Won't give you the entire $4,000, but could give you around $1,000 depending what the current close date and rate is.

Hu Rahul -

Your AirBnB income will be calculated based off net profit. Addbacks include mortgage interest, property taxes, and home insurance since those items are already reflected in your mortgage payment. Lenders can also add back in depreciation. For example: if you write of $20,000 in Depreciation, and you have a net income of $0 on your schedule E, you'll have a $20,000 net profit in the Lenders eyes; giving you $1,667 per month in qualifying income from the rental.

If you want do qualify with more income from the rental, you'll need to write off less expenses. Since it's a vacation home you are looking to buy, you won't be able to use any projected rents from that to use as income. If you purchase it as a rental, you can use the future market rents (at a 25% vacancy factor).

Like @Jeremy D. Flood said - definitely hire a Real Estate Attorney to look over the contract on a seller financed loan.

Private loans will have less red tape and regulations since it doesn't need to be approved by a Bank/Lender. Typically private loans have shorter terms, balloon payments, and higher interest rates. I don't know if this will be the case for you since it's a loan via friends/family.

Is there a specific reason you are considering a private loan vs. Conventional financing?

It will really only improve your chances of approval if your debt-to-income ratio is too high with just you and your wife's income. You already have good credit, and interest rates are determined by whoever has the lowest credit anyway. If you both make enough already for the SFR you want to buy, there's no need to have your brother co-sign. But if the goal is to split the mortgage payment, having him co-sign and have equal ownership rights makes sense.

I like the idea of a HELOC for now and using those funds to purchase an Investment property or two. When rates drop hopefully in a year or two, Refinance to pay off the HELOC and lock into a 30-year fixed. HELOC's are not good long term solutions because of the variable rate, but can be great short-term solutions.

A HELOC now and refinance later is better than a Refinance now and another Refinance when rates drop again.

He doesn't need to have a 28% DTI ratio to qualify. FHA will give an approve/eligible up to 46.9% front end and 56.9% back end.

What's the plan - sell it or keep it as a rental?

At closing, you most likely signed a 1-year long occupancy statement. However, the statement was about your "intent" to occupy the residence for 12 months. Based off what you told us, it doesn't seem like your intent was for this to happen. Life happens, even in the Mortgage world. Things like this happen all the time. 

Safest bet would be to let your Lender/servicer know of the unforeseen circumstances that came up so it doesn't look "sneaky" in the rare and unlikely event they would look into it further. Obviously, they will know if you sell it. Nothing will happen to you if that's the case, but the company will lose money since you sold within 6 months, and the LO's commission would probably be taken away causing a deficit.

Good luck to you!

Hi Benjamin -

Is it a multi-unit? You just need to occupy one unit for a year, you can rent out the other units right away. After a year, you can buy a new place and rent out the unit you left.

If it's a SFR, you have to live in it for 1 year also, but can also rent out the rooms to other people right away.

Hope this helps and good luck!