All Forum Posts by: Zach Wain

This is an interesting move by FHFA, but it should help 2-4 unit house hackers, especially if we can avoid the FHA 3-4 unit self sufficiency test! LLPA's will be interesting. A lot of buyers are in love with the concept for multi unit housing for house hacking, it will be interesting if this drives up the demand for those homes and if price increases will follow.

Good question. To clarify, if you are looking to use Living Trust distributions to qualify (usually from our living trust) I believe you can only do that on conventional and some select jumbo programs. If the Trust income is reported on tax returns, you should be good to with FHA

I am not licensed in NC, but I know a great mortgage broker that is and his company has construction financing available.  PM me if you would like his contact info.

Construction financing in general is hard to find, most banks do not want to mess around the with the long process that is triple the amount of work.  The banks that do offer rental construction loans do charge a premium, there is no way around that.

Good lucK!

Most DSCR lenders have shifted to higher downpayments, 20% and up for more scenarios. Conventional still allows for 15% down on a rental property.

If you house hack and live in the home you can get primary home financing which is the cheapest route to go

After a few years of work new casita/ADU laws and regulations were passed. Looks like they changed the depth of setbacks from your back and side walls (which is big IMO) and listed some specifics about how large the Casita can be depending on your lot and home size. But, it looks like it will be illegal to STR your casita/ADU

https://www.azcentral.com/story/news/local/phoenix/2023/09/0...

I am sure more details will be coming out soon.

I think the smart play is to keep the 2.99% loan in place. Trippling your mortgage rate without a plan for how that will make you more money does not add up. If you need the equity, you need the equity, but use the HELOC first.

Bank statement loans have particular good when compared to conventional 2nd home and rental deals. It depends on the scenario. Also yes, DSCR with long Prepayment penalties is something to be wary of. I am not a fan of anything over a 1-2 yr PPP. 3-5 yr PPP seem crazy to me.

With most lenders it is a no, but also consider the closing costs you will pay vs the savings in rate.

@Chris Burke - Do you have other options to raise cash? How much cash do you need? The HELOC is a great option. Losing the 2.99% rate for something in the 7%-8% range would be very painful.

Great read Scott!

Regarding rates, 6-9 months ago I was in the camp that inflation would cool and we would enter a recessionary environment and rates would settle down.  But the labor market and consumer spending keep trucking along forcing the higher for longer theme.  There is a pretty decent chance that the yield curve uninverts by long term bonds moving higher, which means rates go even higher.  But, there is a 300bp spread between the 10yr T and 30 yr fixed mortgage rates, when 175 bps is historically the spread range (roughly).  Does that spread return to normal as 10yr T rates go higher and we are in the same mortgage rate situation?  Too tough to tell.

I think it is possible the strong consumer spending and labor markets force the Fed to raise further and rates jump across the board.  I think there will be a breaking point when high prices, high rates - take the steam out of the consumer and job market and things come crashing down, which will cause the Fed to shift policy.  

For a soft landing it seems like we need to quickly see wages/job growth/consumer spending to get reigned in fast.