All Forum Posts by: Carrianne Mucho

@Ryan Blake - 1.  Thank you for your service!  

2. VA loan is a great option for owner occupied AND you can even use it on a multi unit property as long as you live in one of them.

3. as far as "tying up" $15K in equity - that would only reduce your payment by around $70 a month. Without knowing more specifics of your situation, it is impossible for me to give accurate advice however here are some things to consider: As an investor, you want to get in the habit of having reserves (once you start purchasing non-owner occupied properties, you will need 6 months of PITI in your account after you make your down payment). If you are going to be relying on rent from boarders (one method of house hacking) - you want to make sure you are still comfortable if you had a "vacancy"or two for a few months. Even as a homeowner, it is a good idea to have at least 3-6 months of living expenses on hand. Or perhaps that money would be well used to improve a property that could use some updates? Depending on the project and how handy you are, you might gain more value with this method than simply putting more down on a turn key property.

If you haven't already, you should connect with a local lender to find out what your maximum payment qualifications are. This may help in answering your question as well. Example, I've had clients who qualify for a $300K home but find one they love for $310...this means with 100% financing, they'd need to come in with the extra 10K. You are welcome to message me or contact me directly if you have financing questions (VA, renovation, conventional, 203K). You will want to get pre-qualified anyway before looking at properties so both you and your Realtor know what your budget is.

Originally posted by @Jason Ines:

@Carrianne Mucho  Thank you for your knowledge! I'm definitely looking forward to doing a low down renovation loan now. Although it won't be several months before i actually pull the trigger on this, all this information will put me on the right path to finding the best solution to enter the game minimizing all my risk as much as I can before then. @Luke Schrotberger Thanks for the input! 

You both work with these types of loans I'm guessing g since you are lenders, which renovation loan do you think is better? 203k or homestyle Renovation?

Thanks again! 

Jason

Check your inbox - I just replied to your message a few minutes ago.  Both are similarly structured and it really depends on your needs (and qualifications).  203K has a lower down payment requirement at just 3.5% but has higher fees and more paperwork.  Homestyle requires 5% minimum down with a bit less hassle.  Your lender of choice, if they know what they are doing, should be able to help you figure out which one is best for you and your situations.

Originally posted by @Luke Schrotberger:

Hi @Jason Ines

You've got some good advice here.  @Carrianne Mucho sounds like someone who can help you with your financing strategy.  The structure of the financing programs are the same regardless of the location of the lender, so I encourage you to work, directly with someone like Carrianne, who is knowledgeable about 203k's.

Before you get caught up in the common perception that "PMI is bad", be sure to look at all factors. Typically the second loan, for the 10% of the purchase price, is a higher interest rate loan and has additional transactions costs to execute the loan. Include those costs into your overall comparison of a 80/10/10 structure vs. paying PMI. in the long run, minimizing your cash out of pocket can create a much larger cash on cash long term return.

Thanks for the comments Luke! I have the same thoughts about PMI. So many people don't know that with conventional financing, PMI declines as more equity is gained and eventually is removed when the appropriate LTV is achieved. Jason, if you plan to hold long term, a second will have more risk in an environment of increasing interest rates (since seconds are an ARM product, not fixed). With a larger first, you are locking in the current low rates for 30 years and have the comfort of knowing that expense will not change.

@Jason Ines I think you're overthinking it. Since it's going to be your primary residence, it may make most sense to do a 90% Fannie Mae Homestyle, then when renovation is complete, refi into an 80% LTV loan assuming you've created enough equity to do that. Yes, you'll have PMI this way but if it goes well, its only for a few months until the work is completed.

A 203k can get you in with only 3.5% down but your offer becomes less competitive and with less equity invested upfront, less likely you can "earn" your way out of PMI.

More detailed information would be helpful to truly give you the best advice.  Feel free to PM me direct or use my profile info to contact me directly.  I'm happy to chat and explain these loan types and how a renovation loan works.  I grew up in San Diego so although I'm in NorCal now, I'm very familiar with SoCal...or I can refer you to someone closer to you.  

Glad to see you are doing your research!  I'm always amazed at how many people in the biz don't know about Homestyle!  

@Ryan Blake, if you don't own a primary residence, house hacking by purchasing a home that needs a little elbow grease or updating using a VA loan might be a great way to get started sooner than later! I'd be happy to put together a sample cost analysis for you - PM me.

Here's a link to all the info for the next Roseville Meetup: 

https://www.biggerpockets.com/forums/521/topics/36...

Ryan Blake You mentioned LLCs; at this beginning stage, may not have much benefit to you. I think you'll be interested in Podcast 162 where Amanda Han talks about tax strategies and touches on this topic.

Ryan Blake - Welcome to BP. Sounds like you're off to a great start already! Sophia Morris has some good advice; research research but don't overwhelm yourself and get "analysis paralysis". Focus on learning how to find good deals and building your team. Find what parts of REI you most enjoy and find good partners to handle the rest. I'd love to hear more about where you are beginning your journey and where you want to go; maybe I can provide some lending advice. For example, as a Veteran, you have access to a VA loan for your primary residence, an excellent way to get started with minimal out of pocket. I'm nearby in Roseville and do plenty of loans in Sacramento. Feel free to PM me with specific questions.

@Daniel Benoit - interesting concept but hardly sounds worth the hassle.  Here in California, the homeowner's property tax exemption is only $7,000 of assessed value ($70/year off your tax bill).  Perhaps it is higher in other areas? 

@Carlos Rodrigues - Front Ratio indicates that you are carrying some debt payments other than the proposed mortgage.  Find a lender who can 

A) explain something as simple as closing costs without you having to ask them to.  I am assuming that the 20K includes both your downpayment (3.5%) and closing costs (3%-5%).  

and B) who can help you create a plan to improve your qualifications.  For example, there may be something really simple like paying down/off a credit card or two which would get you more bang for the buck than a larger down payment.  A $400-500 per month car payment is equivalent to about $100,000 in purchasing power.  

@Alex Volk & @Michael Koncaba - Clarification: The Total Assessed value is the amount the current owner is taxed on.  Typically when a property changes ownership, it is re-assessed at the current market value (often the sale price).  That is the value used to assess the new owner.  This may not be a huge differentiation outside of California, but important to note here since, if the property has been owned for a long time, the assessed value may be significantly less than market and therefore significantly less than what the new owner should expect to pay.