I am slowly pushing forward on my real estate journey. My current "hurdle" is finding a lender. I say hurdle because it is something that I know is critical but is also very intimidating.
I have a set criteria that I am looking for so it helps when talking to lenders, but I have not found anyone that offers what I need yet. I am currently looking for a duplex/multifamily under 300k just north of Milwaukee to house hack in. I plan to live there for over a year so I understand FHA is an option. Right now, I can afford about 5% of 300K as a down payment (while also maintaining cash reserves) so I am also looking for a lender that may do a portfolio loan close to those terms. I have less <10% DTI and a decent credit score.
I have called some local banks and all so far have only had arm loans without any other solid options other than the conventional 20% down loans. I was wondering if I am too far off with my expectations? If so, what would be more realistic? I was also wondering if anyone may have recommendations for a lender that handles loans close to what I am looking for in the Greater Milwaukee area? Any feedback is welcome as this is all brand new territory to me.
I have house hacked twice my first time was at 10% and my second time was an FHA at 3.5% which was two years ago. I used Bell Bank in Wauwatosa on both and worked with Jeff and Brian on my last one (Father & Son). Both of my mortgages got sold to US Bank but I have had a good experience with their services and with US Bank servicing the loan.
I am currently househacking in Shorewood. I utilized a 3.5% down payment on an FHA loan a few years ago. I partnered with Mike Monaghan from The Equitable Bank in Wauwatosa. He was great to work with as a first-time homebuyer. He was very informative and always available to answer questions. Helped get me the best rate available at the time too, beating out several other banks.
Feel free to reach out if you have any additional questions.
I recommend connecting with a good mortgage broker. It's well worth the broker fee in my opinion, especially with a loan like this.
Thank you everyone for your information I will definitely look into the lenders mentioned. @Brock Mogensen would you be able to explain briefly what makes a good mortgage broker? Lending is probably the area I feel the least comfortable in right now so I am trying to learn what I can before I make any decisions. Right now, I simply want a preapproval letter to start making offers on properties off the MLS. I may be just overthinking this...
If looking for a conventional loan (non-FHA), a Duplex is going to require 15% down, and 3-4 unit will require a minimum 20% down. These are the confirming guidelines which you can also find here: http://www.freddiemac.com/sing...
Honestly, if you're looking for a low DP on a house hack for 1-2, we always recommend FHA. It's a no brainer so long as the property won't have any issues passing an appraisal. Yes - you have Lifetime PMI.... But with our 8.5% year over year appreciation in our immediate market, (and probably greater for the upcoming 12-mos based on the ridiculously high over-asking offers we're seeing) you'll be able to refinance conventional or portfolio within 12-24 months at an 85-80% LTV, eliminate the PMI forever, and be in good shape (assuming you still live in the 1 unit when you refinance).
If there are any reasons the property wouldn't qualify FHA, it's like additional assets will be required. Portfolio loans are going to require greater DP and also probably greater closing costs. An all-in-all worse scenario if liquidity is a concern.
Hope this helps!
@Adam Chmielewski A mortgage broker will guide you through all the questions you have on financing. Definitely suggest using one on the first deal. I'd say the best way to find a good one is through referrals. I can connect you with one I've used if you'd like.
Thank you both! @Marty Johnston you put it in a way that helped me connect all the dots. That makes a lot of sense with the info I was receiving from banks. I was just not looking at it the right way. @Brock Mogensen I will definitely reach out to some people and see if they know any good brokers. That sounds like a good option for my current situation.