All Forum Posts by: Wendy S.

Good day all. So my daughter finally got her offer letter which is pretty decent. Now here is the thing, I'm wondering is it better to have her apply for a line of credit now, just to have in case we see a cash deal, or have her apply for a mortgage then get a line of credit?

Based on tentative discussion with broker she can qualify for abt $200,000 primary residence and $100,000 investment property. So this got me thinking, why not get a primary but then have access to cash for a deal, instead of putting 20/25 percent down on an investment property.

Of course if we went the route of buying a cash purchase first, technically I would be using her LOC to fund the deal, but not buying in her name so she does not lose her 1st time home buyer opportunities. Also ideally this would be a quick flip so LOC would be repaid at time of her applying for a mortgage.

Primary goal is to have access to cash, so the LOC would not even be used if we don't see a quick flip opportunity.

Any thoughts @Andrew Postell, @Chris Mason? 😊

@Andrew Postell

Update.

So the sellers don't seem to be in a hurry to sell so I've moved on. Yes my lender would have been able to give me 5.25% rate provided property already had a tenant in place.

However, based on this restriction, I've decided to use another portfolio lender, using my bank statements to qualify with comps of market rent. So the property don't need to be rented prior.

With this new lender, I'm presently pre-approved with a tentative 7.65% interest rate, with 20% down, but can get that to 6.65 with 25% down. Is this a good rate?

@Mathew Fuller

While I don't have the answer to your questions just wanted to point out 2 things based on your post. It seems you have a WF checking account. In order not to pay the monthly service fee you could do:-

A. Swipe your debit card 10 times each month. Look on your activity report to see how many you've done for the month and by when you would need to get them all in. I used to make small necessary purchases this way. Then I realized I paid my HDepot cc promotional balance monthly, so I had the cashier make six, $10 payment leaving me to only fill 4 more swipes to avoid the fee. Now mark you, HD is 3 mins from my house so when I did this to me it wasn't a big deal to stop by once monthly or while am already there. Then I'd reward myself with a six-pack or a bottle of wine or some other vice.

B. Your rental income deposited to your account in excess of $500 also allows you to avoid the fee depending on how your collection is set up. I use Cozy so it's a direct deposit.

Now you can go partner with someone and use that $1,500 to make a couple hundred bucks a month. Hint, think of someone who flips other items than RE but short on cash.

Cheers.

@Andrew Postell

Thanks. Did the refinance.

@Margaret B.

Thank you. Closing costs were not yet discussed.

@Andrew Postell

Thanks so much Andrew, your detailed response is quite appreciated.

I am promised a LE by Monday, provided I submit all necessary documents, which at this time outstanding are payslips and bank statements.

Yes, you are also correct on the rate as I've been quoted on a kind of no docs loan at about 7.5%.

Will post update on Monday.

Happy Thanksgiving!

@Jaysen Medhurst

Yes, thanks for your response. That's my thinking as well and I actually used the DSCR of 1.4 which would be the payment at $580.

Broker suggested 25% down payment with $550 PITI, which is why I don't get why 25% would be required?

@Chris Mason. What am I missing or not accounting for?

He also says my boarders income cannot be used until its been on 2 years tax returns so I guess that's end of this year so by mid 2020 I should have an income adjustment.

Hello, BPers, I'm looking at buying a property using its own rental income to qualify as my personal DTI is already maxed. I do have excellent credit with lowest number being 773.

Property listed for $100,000 and current rent is $1,050. My broker says he can get me a 30 year loan with 25% down, at 5.25 interest with a PITI of abt $550.

He says they would use $787.50 ($1,050 X 75%), but then the income would need to cover at least 50% of the PITI. So to be on the safe side the allowable income would need a 45% debt ratio.

I'm thinking 25% down is too much for the required property and the rate isn't great. Not do I fully understand the debt service requirements. Am I wrong, is he right or do I need to find another lender?

Confused??

@Lydia S. Thanks for that my error. Yes, I meant which attorney to close with. 

@Raymond J. Rodrigues. Yes, we were wondering why they have removed sheetrock etc. So haven't asked to look inside as I was quite concerned with the attorney issue.