Lender says “no loan for a 5 hour commute”. HELP
Montgomery, AL · Member since 2017 · 25 posts · 10 votes
Lender says “no loan for a 5 hour commute”. HELP
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Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
8yWhen I googled "Jozelle B air force" your biggerpockets profile was the top of the list. It says you want to buy rental properties.
That flag probably could not get much more red.
43 Replies
- Investor · Des Moines, IA · Member since 2015 · 380 posts · 201 votes8ySorry just saw your previous post about not having the down.
- Rental Property Investor · Allentown PA, United States · Member since 2016 · 567 posts · 442 votes8y
Is there a specific reason your so dead set on getting this property? Even if the projected returns are 5% better than something local, is it really worth the extra time and effort of that commute?
- Real Estate Investor · San Francisco Bay Area, CA · Member since 2016 · 66 posts · 36 votes8y
In the Bay Area, people commute 2+ hour one way easily if work and home are in San Francisco and Silicon Valley. And people are getting conventional loan fine here. So I'd find different lender who can help you with your situation.
- Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes8y
She mentioned that she is looking for a VA loan, many of these have a 0% down payment requirement. The long commute and the fact that it is a multi-family property are the big issues here. If you were looking at a single family house it may be a slightly easier sell, especially if you had family or a non-financial reason for choosing that location. If you have no reason for the location they are looking to prevent potential fraud. I agree it will depend on how it is presented, it isn't common to have to write a letter of explanation to an underwriter however this seems like a hard sell with the information provided.
As mentioned by others, this may be easier with another loan type, if it is feasible on your end. Could consider an FHA with a low down payment or you could shoot for a conventional however if you don't have an money for a down payment these won't work. Portfolio loans will also not work without a down payment.
If down payment is an issue it sounds like your only option may be to work on your presentation and pitch non-financial reasons.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes8y
Originally posted by @Chatree C.:
In the Bay Area, people commute 2+ hour one way easily if work and home are in San Francisco and Silicon Valley. And people are getting conventional loan fine here. So I'd find different lender who can help you with your situation.
That is 2 hours because of it being urbanized. Palo Alto and San Francisco are only about 40 miles apart, while the 3 hour commute being discussed here from Georgia to Florida is probably 150-200 miles away, as Montgomery Alabama is probably close to 150 miles to the Florida border.
District Invest Group545 Reviews - Real Estate Agent · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes8y
it is a family common situation and you don"t have to commute every day or you can stay with a friend near work some days The letter is the key The lender should be able to help you Here is a quick thread
https://www.ovmfinancial.com/va-mortgage-guidelines-for-determining-if-primary-residence-is-within-a-reasonable-commute-to-work/
- Real Estate Investor · Shelton, WA · Member since 2013 · 369 posts · 639 votes8y
Excuse my beer math:
2.5 hours = 150 miles-ish
Say 300 miles each day
avg 30mph = 10 gallons of gas each day
$22 gas/day
22 working days/mo = $484/mo in gas
Oil changes at 3k miles = 2 oil changes/mo= $160/mo
You're almost at $650/mo in additional expenses each month, not including add'l wear and tear and accelerated depreciation on the vehicle.
My biggest question is, what would be more important? Getting this ONE property, or living closer to work and saving yourself $650 dollars and 110 hours of time each month?
Honest question: What do you think you could get accomplished in your investing career if you spent that $650/mo on marketing, and 110 hours a month on learning, networking, and finding deals? :)
Either way, good luck to you! - Real Estate Broker · Westminster, MD · Member since 2017 · 159 posts · 101 votes8y
Bottom line: If you don't have a substantial down payment your only option is to catch a local bank interested in doing a portfolio loan. The VA loan program will help you buy a home but only if that home meets certain standards. I suggest spending more and buying a better deal that you can close on with VA 0% down.
- Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes8y
Originally posted by @Account Closed:
Excuse my beer math:
2.5 hours = 150 miles-ish
Say 300 miles each day
avg 30mph = 10 gallons of gas each day
$22 gas/day
22 working days/mo = $484/mo in gas
Oil changes at 3k miles = 2 oil changes/mo= $160/mo
You're almost at $650/mo in additional expenses each month, not including add'l wear and tear and accelerated depreciation on the vehicle.
My biggest question is, what would be more important? Getting this ONE property, or living closer to work and saving yourself $650 dollars and 110 hours of time each month?
Honest question: What do you think you could get accomplished in your investing career if you spent that $650/mo on marketing, and 110 hours a month on learning, networking, and finding deals? :)
Either way, good luck to you!I gone through this analysis through the years with co-workers. One company relocated from NYC to central Jersey, and if employees chose to keep their job, it's either a long commute or you relocate. For some people, because of family and job obligations, they can not.
One fella, an older guy chose to stay with the job. He was with the company a long time, and cannot get a better paying job, and I can see he'll not do well in interviews. I asked him why he's not moving. He said his wife is the Superintendent of the school district, years ago paid $125,000/year, his kids are finishing up high school. Reason for the company move was wages in Central Jersey was lower and his wife would go from being head of the schools to a clerk. Or she'll have to do a reverse commute. His kids would leave all his friends behind. What did he do? He rented a small apartment near work where he commuted. His wife and kids stayed in Long Island. I asked him if wife would have problems with that. I said if your wife trust you to behave, guess it's OK.
In my analysis with him, his expense for commute would pay for the apartment. What you did not include in the analysis is the commute would require the car to be replace every three or four years, which adds a few thousand more a year. He was hemming and hawing, but when I pointed out he'll have to replace his cars, that did it.
Another co-worker also in his fifties quit his job and took the company offer. His wife is the president of a non-profit, also earning some six figures. He was in his fifties, looked for work for a while but couldn't find anything. So rather than a long commute, it's forced retirement.
I chose to stay with the company, took their help in moving and buying the house. My wife had a high paying finance job, commuted for a while, then quit. Was an almost 2 hour train ride due to Amtrack problems. She tried looking in Central Jersey, but the best she can find were secretary jobs, at half of her former pay. What we save on commuting we lost on her pay while she was out looking for a year. Her reduction in pay would just be covered by savings on commuting. For her, a bad deal.
She had a happy ending. The job she left in NYC they had trouble filling. I agreed to quit my job to return to NYC, and when she told her former employer of her plan, they hired her on the spot with a $15,000 increase, plus a promotion.
- Montgomery, AL · Member since 2017 · 25 posts · 10 votes8y
Originally posted by @Frank Chin:
Originally posted by @Russell Brazil:
A 3 hour commute? Thats the distance from New York City to Washington DC. If i were an underwriter, I wouldnt believe it either.
A co-worker of mine did a 2-1/2 plus commute from Philadelphia to NYC everyday. I didn't know him that well and I was even shocked that he did it for 30 years. He did it by bus though. Says he gets up 4:00am and in the office by 9:00am. I learned this at his retirement party.
I thought no one else does that till my wife had a co-worker that bought a house in Philadelphia, and commuted to downtown Manhattan every day. We were house hunting in NYC, and in the early 80's, a SFR in good areas go for 150K in the high interest environment of over 15% for mortgages.
I got invited to the co-worker's house in Philly. They got the house for around 40K, a mansion that needs a little work on it's own lot. The had three times the room for a third of the price in NYC. He tells me they ran across a number of others doing the same since he moved there. So for them, the commute was worth it.
Back then, Philly prices were ridiculous low compared to NYC and even thought of doing the commute ourselves. Unfortunately all the good paying jobs are in NYC, such as finance and IT. My wife's friend in Philly got a $20,000 inheritance, bought a duplex for $40K, the tenant rent covered the mortgage and she lived rent free from day one. She was 27 years old just out of college a few years at the time. She was fortunate to be stock broker for Dean Witter, made enough to pay the mortgage off in 4 years.
Having considered it, we house hunted ourselves in Philly for a while, it's a choice of getting and keeping a good paying job, maintain a career path and live in a dump, or have the same good paying job, and living somewhere you rather be but enduring a long commute. Yes, we took choice one, we stayed in NYC, and the place we got was a dump compared to Philly.
this experience taught me how uncommon a long commute can be. I have friends that travel from upstate ny, ct, mass to go to work in the city so it really seemed like a normal thing to me.that may be a unique aspect of working in a place like ny where the cost of living is so high. However for me, the quality of living i want is just not available near my current base so that's why I made the choice i did. Plus, i love Florida and Pensacola is close to my base and other military bases too so its an ideal place for me
- Montgomery, AL · Member since 2017 · 25 posts · 10 votes8y
Originally posted by @Bill Goodland:
Is there a specific reason your so dead set on getting this property? Even if the projected returns are 5% better than something local, is it really worth the extra time and effort of that commute?
its not about the returns. I want to live in Florida and the duplex is just so someone else can pay my mortgage.
- Montgomery, AL · Member since 2017 · 25 posts · 10 votes8y
Originally posted by @Chatree C.:
In the Bay Area, people commute 2+ hour one way easily if work and home are in San Francisco and Silicon Valley. And people are getting conventional loan fine here. So I'd find different lender who can help you with your situation.
i was interested in a VA loan or other loan program that wouldn't require such a high downpayment
- Montgomery, AL · Member since 2017 · 25 posts · 10 votes8y
Originally posted by @Account Closed:
it is a family common situation and you don"t have to commute every day or you can stay with a friend near work some days The letter is the key The lender should be able to help you Here is a quick thread
https://www.ovmfinancial.com/va-mortgage-guidelines-for-determining-if-primary-residence-is-within-a-reasonable-commute-to-work/
thank you so much. I am working on a letter now and will consult this
- Montgomery, AL · Member since 2017 · 25 posts · 10 votes8y
Originally posted by @Account Closed:
Excuse my beer math:
2.5 hours = 150 miles-ish
Say 300 miles each day
avg 30mph = 10 gallons of gas each day
$22 gas/day
22 working days/mo = $484/mo in gas
Oil changes at 3k miles = 2 oil changes/mo= $160/mo
You're almost at $650/mo in additional expenses each month, not including add'l wear and tear and accelerated depreciation on the vehicle.
My biggest question is, what would be more important? Getting this ONE property, or living closer to work and saving yourself $650 dollars and 110 hours of time each month?
Honest question: What do you think you could get accomplished in your investing career if you spent that $650/mo on marketing, and 110 hours a month on learning, networking, and finding deals? :)
Either way, good luck to you!duty stations are temporary. When it is all said and done, I want to live in Florida. The benefit of the duplex for me is having a tenant living at my address without living in my house to pay my mortgage for me. Real estate investing is something that I am interested in but it is not something i am actively currently pursuing. This house is about finding my home.
- Real Estate Professional · Fullerton, CA · Member since 2015 · 9 posts · 6 votes8y
FHA and VA loans are most common loan for First Time Buyer (FTB) and VA for Military Personnel. If your a VA you must always use your VA loan as your first option and no others. For VA they will require your DD14 for qualification. For Active VA it is common the subject property is being purchased is usually are far distance from there work place is always given. Each mortgage underwriter has its self risk review beside their mortgage guideline by FHA and its investor, when a buyer or borrower is in a process of a home loan. The key on your situation the underwriter is ensuring the property will be owner occupied and it will be in reason for driving distance. It's a common practice the mortgage underwriter will request motivation letter if the purchase property is more than 25 miles from borrower/buyer work location. To overcome such hurtle is to provide evidence the motivation why you choose to purchase property for such distance especially if your current residence is within the minimal (ex: 5 - 30 min drive) vs. your purchasing a home that is 3 hours drive one way and 6 hours total round trip in your motivation letter. In addition having reserves like 401k, IRA, Military Saving Plan is also a key factor as motivation and security for underwriter to consider. Some direct government mortgage underwriter are more conservative approach versus when you working with mortgage banker and direct lenders. I hope this help.
- 8yZack KarpPro MemberLender · Schaumburg, IL · Member since 2015 · 833 posts · 774 votes
@Account Closed I just closed one for a Veteran not too long ago with a similar commute. If you want me to connect you with a rockstar VA loan specialist in FL, send me a PM.
- Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes8y
Originally posted by @Paul Alvarez:
FHA and VA loans are most common loan for First Time Buyer (FTB) and VA for Military Personnel. If your a VA you must always use your VA loan as your first option and no others. For VA they will require your DD14 for qualification.
Neither active duty or non active duty are in no way required to use a VA loan at anytime to purchase a property. The DD214 is a document for those who have separated from the military only
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