Mind Blowing Mortgage Facts and Misconceptions

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We've discussed all sorts of niche things, like escrow holdbacks, alternative income documentation (such as property cashflow w/ no personal income docs and bank statements instead of tax returns), and we've kept it simple with cash out refinance fast facts

This one is going to be more on the simple/traditional side, and focus on what could have been, what should have been, and what could still be.

If you want to skip all the reading, click here and fill out your name/email/phone and I'll be happy to answer your questions on the phone. Free Mortgage Consultation, no credit pull required. Twenty minutes on the phone with me is about the same as six months of internet research, is there any simpler a way to accelerate your Real Estate Empire timeline by six months, at no cost and with no guru fees? I think not. 

Today your Real Estate Empire might consist of a triplex or a single family home that you will live in, but you will be crushing rebel scum and renovating Star Destroyers using the BRRRR strategy before you know it!

So, without further ado or random tangential sci fi references, I call this one...

Mind Blowing Mortgage Facts and Misconceptions.

Here we go:

- REI buying cashflowing real estate should generally not have debt-to-income ratio issues, however overlays and lack of MLO training/knowledge create DTI issues. Don't work with a lender saddled by a lack of knowledge or overlays.

- Rental income can count on a vacant property being purchased.

- Rental income can count before it appears on tax returns, if it makes sense.

-Rental income from your departing primary residence can count in the mortgage math.

- Rental income is counted more generously on non-owner occupied properties, not less generously.

- No landlord experience is required to count rental income.

- Freddie Mac has a 95% LTV 2-4 unit program for folks starting out that do not currently own real estate. Better financing than FHA. We call it the "House Hacker Mortgage" when we do it; our staff and underwriters love doing these.

- Fannie Mae will subsidize you taking care of family housing needs. Elderly parents who cannot qualify for a mortgage, or a “physically handicapped or developmentally disabled adult child,” can satisfy owner occupancy requirement on your behalf, without you actually living there. Reminder that an “owner occupant” mortgage comes with a lower down payment requirement, and enhanced interest rate! Do you really want mom and dad in a retirement home, or do you want them living a few blocks from you, where you can actually help take care of them? 

- Depreciating renovations can be advantageous. If you're worried that this year's BRRRR is going to screw with your calculated cashflow when you apply for a mortgage next year, ask your tax professional how much of the renovation can be written off on the depreciation line of Schedule E. Keep receipts for anything that can't be written off as depreciation.

- Vacation homes can be purchased at 90% LTV.

- Investment properties that are SFRs can be purchased at 85% LTV, depending on how many mortgages you already have.

- Unemployed and self employed people can get mortgages. Disability income, pension, retirement, social security, etc, can often be used as mortgage-qualifying income.  

- Fannie Mae caps you at 10 financed properties. It also caps your spouse at 10 financed properties. So if you put 10 in one spouse's name, and 10 in the other, as a "power couple" you can get to 20 financed properties, all with GSE-subsidized cheap financing.

- Cash out refinances are available on investment properties for investors with up to 10 financed properties, too.  Here's the cell phone app that'll let you track rates, and day-trade when you start the cash out refinance (Hint: right now, rates are the lowest they've been since the election - a cash out refinance I locked last week had the same interest rate as a rate/term refinance two months ago!). You can use these funds for down payments, with no seasoning. 

- In general, secured borrowed funds can be used for down payments on investment properties. Any borrowed funds secured by other real estate, not just HELOCs and traditional cash out refinances - your investment partner can lend you the money, too!

We just scratched the surface. There's more. A lot more!

If it's California real estate, we love lending on it. The company name and Golden Gate Bridge color is not a coincidence:

We are an independent family owned mid-sized lender, headquartered right here in the Bay Area. We both bank & broker mortgages. 

Reach out now!

Click the link above and fill out your name/email/phone number (no credit pull authorization required) for more information about the solution to your financing needs that takes maximum advantage of every little thing in the eight zillion pages of Fannie Mae and Freddie Mac guidelines, with an unparalleled level of service. 

We certainly do "vanilla" mortgages as well, with a comprehensive plan in place that includes laying the groundwork to remain qualified for future investment property purchases. The first one is easy, first time homebuyer mortgages are famously simple transactions (that's why everyone says they are a "first time homebuyer specialist"), but are the professionals you are working with going to be thinking of the future? That's important. While you can certainly reach out to our team after someone else messed up your qualifications for future mortgages, and we can/will certainly try to fix it, there is no guarantee. 

If you're still in the early planning stages of your real estate empire building, check out our cell phone app that includes California accurate mortgage calculators. 

Shameless use of  keywords incoming: Bay Area, Los Angeles, San Diego, Oakland, Piedmont, San Leandro, East Bay, South Bay, North Bay, (but no Tampa Bay please), Marin, San Francisco.

Great post!!!! @chris mason

Regarding the 20 loans ...are you sure that's right?  If I am married and wife is on ten and I am on ten we can technically own 20 properties with regular Fannie Freddie loans?  This is  news to me has this always been the case?

Originally posted by @Alex J. :

Great post!!!! @chris mason

Regarding the 20 loans ...are you sure that's right?  If I am married and wife is on ten and I am on ten we can technically own 20 properties with regular Fannie Freddie loans?  This is  news to me has this always been the case?

 Yup, I'm sure. You may be encountering overlays.

Keep all the stacks of paperwork from the closing table from your ten, underwriting will ask for parts of it when your wife starts applying for her ten, for definitive proof (above and beyond her credit report, which can be erroneous) that she isn't on the ones that she & her credit report says that she's not on.

If you've got a strain of the OCD gene, set up Schedule E on your tax returns to have "his & her" sets of pages moving forward.

You can also go back afterwards and, with refinances, start rearranging which property occupies whose financed properties slots.