All Forum Posts by: Cameron McCown

@Eric Bowington, I'm in Missouri, and I can help you.  I work at a bank.  Please message me or call 314-413-1211 for details.

$15,000 is about 8% of $185,000. The closest Conventional loan would require 20% down, so that's not an option. My suggestion might be to purchase it owner-occupied, which means the seller would need to let one of the leases expire. That would allow you to put 3.5% down on an FHA loan, which is $6,475, and have the rest for closing costs and reserves.

Another possible option is to get a hard money loan for the $185,000, but HM lenders I know are going to be shy about 1) loaning to a first-time investor and 2) loaning on a property with tenants whose leases are up in the next 3-6 months.

Hope this helps.

@Curtis H.

It does matter some. Loan size also matters.  In most places, they are in the 4s; you're right about that.  The other thing to note is that he might be pricing you based on the pricing he has access to- In other words, his rates sheets might have it that the company's rates are in the low 5s for investment properties and the high 4s for owner-occupied.  You can likely find more aggressive rates for the same or less cost.

The discount points being waived for 25% down likely has more to do with the natural pricing of the loan at 75% LTV than it does some "special" deal for putting 25% down instead of 20%.

The bottom line is I think it's not too difficult to find a lower rate and lower origination charges than this guy is offering you- that's just in my experience.

@Curtis H. Nope!  For a 760 credit score on investment property, you should be looking at 4.625%-4.75% with 20% down on 30-year fixed.  Origination charges $800 with no discount points.  A discount point is an amount a traditional lender uses to buy down your rate (a bit funny here, since your rate is 5.375% WITH the points).

Keep in mind most regional or state DPA (Down Payment Assistance) plans have income restrictions on either the applicant or the household.  Sometimes a bank will have DPA grant programs first-time home buyers depending on the location.  I would call the local financial institutions and do some digging here.  There are no national programs that I know of which which will allow less than 3.5% down on a multifamily.

You're welcome!

@Christian Wilson, Let me add some clarity.

On $145,0000, you could either put $5,075 down (FHA) or $7,250 (Conventional).

If you go FHA, there is a $2,537.50 fee (1.75%) for doing so.  Some people finance it into the loan (thus pay it on loan payoff), and some people pay it up front.  The difference between 7,250 and 5075 is only 2175, and it's equity, not a fee.  So by going FHA, you're -$362.50 off the bat.

Then over time, the PMI on an FHA loan is $99.11/month (.85%/12), and it never goes away.
On a Conventional loan, the PMI averages about $90.62 (.75%/12), and it goes away when you have 22% equity.

The average rate is lower on an FHA loan (given the same amount of points paid), and the higher PMI + up-front PMI does not make it often make sense, in the short-run or the long-run especially since it goes away in the long run on a Conventional loan.

Hope this helps.

@Christian Wilson If it's going to be a 3-bedroom single family house, don't use an FHA loan. Put 1.5% more down and go Conventional. The FHA has 1.75% in up-front mortgage insurance as a fee, and the monthly mortgage insurance is also higher. If your credit score is at least 660, go Conventional and save yourself money on a single-family.

@Christian Wilson You might consider waiving escrows on this purchase if you want to minimize cash to close.  Escrows are 3-6 months of taxes and insurance set aside at closing.  They're you're money set aside, and they start an escrow account for you that disperses every year to pay the county and your homeowner's insurance company.  If you paid those instead, you would not have to pay the 3-6 months up front plus 1 full year homeowner's insurance.  In putting at least 20% down, you'll have that option.

Here's the PMI calculator I use:
https://www.mgic.com/ratefinder-rates/quickQuoteDataEntry.htm

I admittedly prefer the bank I work for for financing, but the PMI shouldn't vary from above regardless.