All Forum Posts by: Andrew Garcia

Hi @Sean Robbins, welcome to the community!

Thank you for introducing yourself!

I look forward to seeing your progress in your REI journey.

Please let me know if I can be of any assistance.

Hi @Jeffrey Bollo, welcome to REI!

House hacking is a great way to start as you only need 3.5% down and you can reduce your monthly housing payment to zero or only pay a few hundred per month.

From there, the world is yours for the taking,

I look forward to seeing your progress on your path to financial freedom.

Hope this helps! Let me know if I can be of any assistance.

Hi @Chad Brown, welcome to the community!

Congratulations on taking the jump!

There are two things that you should take into consideration:

1. HELOCs are generally better for short-term financing because they are ARMs and are interest-only to begin. This can cause a lot of trouble because the numbers might make sense now but will they make sense in 2 years if rates are 4% higher and you still have not paid down any principal? 

2. Foreclosure auctions generally require you to have cash on hand so if your plan is to buy a property for cash and then do a cash-out refi to get your money back in 6 months and pay off the HELOC, then ignore consideration #1.

Hope this helps! Let me know if I can be of any assistance.

Hi @Michele Velazquez, first you have to determine your non-negotiables.

Is cashflow on day one a priority?

Is a market with strong population growth important to you?

The first step is determining which your non-negotiables are and then once you have those, you can narrow down the list.

Hope this helps! Let me know if I can be of any assistance.

Hi @Josh Mills, yes in short, you have it.

The easiest way to think of it is like a second mortgage. It is a fully-amortizing fixed-rate loan in a second-lien position behind your current mortgage.

You keep your current rate without needing to refinance at a higher rate.

The interest rate will be higher than on a cash-out refinance but since it is only on a portion of the loan, the blended rate is generally lower than a cash-out refi without needing to restart the amortization schedule.

Hope this helps! If you have any questions, feel free to ask.

Hi @Jahshim Snyder, typically the front-end loan will cover the purchase price + rehab.

For example, if the loan requires 15% down and you are buying a $250k house with $50k rehab, your down payment would be $45k with a loan amount of $255k.

However, if you do not want to use the BRRRR method, house hacking is a great way to scale.

Additionally, as the others have said, VA loans can only be used on 1-4 unit properties.

I hope this helps! Let me know if I can be of any assistance.

Hi @L. Brown, you can use the FHA loan if you are occupying one of the units as your principal residence.

If you are living in one unit and renting out the other unit, then it is considered a primary residence loan, not an investment property loan.

The lender that you are currently working with might not be super well educated on the guidelines.

Hope this helps! Let me know if I can be of any assistance.

Hi @Leeling Chew, as the others have said, none of us can really say without knowing more about your long-term plans.

If you are going to refinance in 6 months, paying points is almost never a good idea.

If you are going to keep this loan for the next 30 years, paying the $8,000 is almost always a good idea.

Additionally, there are options in between there as well. Your loan officer should have given you an option at 5.5 with somewhere around $4,000 as well.

Hope this helps! Let me know if I can be of any assistance.

Hi @Cornell Raynor, great question.

HELOCs are a second loan on the property. Their payments are going to be to a different company and for a different amount, independent of the 1st mortgage.

Please note that HELOCs are generally interest-only to start so you may be making the payments for 10 years and never pay it down.

If you take one out, I would advise making more than the minimum payment so that you can avoid paying for 10 years and making no progress.

Hope this helps! Let me know if I can be of any assistance.

Hi @Paul Sanchez, using a HELOC and then paying it back in 6 months could be a good idea.

There are a few considerations, however.

1. As @Andrew Postell said, 85% cash out on a 4-unit is unheard of, especially with lenders tightening up on some higher-risk products such as that.

2. Could you make up the $50k some other way so that if rates skyrocket, you are not forced to take a higher rate?

3. If you want to lock in a fixed-rate second lien today, a HELOAN is probably right for you. It will have a higher interest rate than a HELOC or purchase loan but they generally go up to 90% LTV. They can be hard to come by for 4-units, however.

Hope this helps! Let me know if I can be of any assistance.