All Forum Posts by: Charles Granja

In the past, I have purchased homes and title costs are normally 700-1200$ for homes between 100-250k (California/Missouri/Kansas).

For a 420k house (Chicago), I am purchasing they have the total at 3500$, seems like a lot of ancillary costs but wanted to hear other feedback. I am going to look around on Monday. Not sure if this matters but this is an assumable VA loan.

The breakdown:

Environmental protection Lien- 180

Alta loan policy- 550

Alta 9- 180

Deed- 60

Mortgage- 60

Recording service fee- 15

Loan policy fee- 3

Title idemnity service fee- 175

Settlement/closing fee- 1750

Policy- update search

Electronic delivery fee- 40

Chain of title- 250

Closing protection seller- 25

Closing protection buyer- 25

Overnight delivery fee- 40

 I just use Zillow and an agent. If you type in assumable under keywords it will filter the results. If there aren't any results, try different keywords. Otherwise drive to open houses every weekend until you find a property. 

 Hi,

You should be able to use some of that income to qualify you for the multi-family if you have rented them for 2 years. Otherwise, the current leases will negate the debt service and not affect DTI that comes from W-2. When you are buying next year, if you find a duplex that has an existing tenant, they can use 75% of the income to help qualify you for the property. Another way you can invest with no W-2 is DSCR loans but they aren't worth it for you and technically you aren't supposed to live there but I don't know all of the stipulations.

Don't listen to people telling you that it is difficult or can't be done. Within 2 hours I identified 20 VA assumables. The next day I texted 50 real estate agents and came across 10 more properties. For two weekends, I went to open houses and asked the agent to let me know if the property was VA/FHA, what the interest rate was, what they owed on the property, and if the seller was interested in doing an assumable. My loan officer wasn't capable of doing VA assumables so they had to transfer me to a different team that knew how to do them. No one knows anything about assumables, people are trying to catch up. Interest rates have been decreasing and they were not relevant, now they are a game changer. There is no "due on sale" clause for assuming a loan because it is approved by the lender and initiated by the seller. Expect a 30-40 day close timeframe.

I am currently assuming another VA loan from a veteran. They have 2.6% interest, I am paying the equity difference in cash. If you have a certain disability rating you may qualify for a complete property tax exemption. In areas like Chicago or Texas that can be a 20-30% discount in debt service which is significant. You can use the VA loan to assume up to a quadplex but will current lease agreements to count towards your income. You can gain multiple properties with the VA assumable but after your first use will commit a portion of your entitlement and eventually will need to pay the seller for theirs. That is the only way you can achieve Va assumables at scale. You can also look at FHA assumables. Since interest rates are high I am planning to adopt this strategy, 20% of existing homes are FHA or VA, many sellers and agents are unaware of assumable loans.

If you are worried just get an assumable VA or FHA loan, you can take advantage of reduced prices and low-interest rates. I just went under contract at 2.6%.

No one knows if inflation will remain elevated for as long as it did in the 1980's or if it will be similar to WW2. No one knows if the fed will pause its hike cycle and to what end that will affect price action. No one knows how deep into recession we will go in the next 12 months. Anywhere you put money during a QT cycle can be risky but if inflation stays high, leverage will benefit investors just as they did in the 1980's. 

Also, when interest rates rise to 10% you don't need to buy at 10%. You can still buy homes at 2-3% interest with assumable VA/FHA. For a small investor or a person trying to buy a home, this can work as a solution for their needs.

Thank you, this is helpful. I’m phrasing this way because I am buying more houses next year and my equity position on this 1 property would be 0%. I don’t care where prices go and don’t think anyone has a crystal ball, I’m just going to keep buying good real estate. 

Hello,

I have a question on a scenario:

From what I am aware on QM loans, what matters is my credit score (history of paying debt service), my income (W2/DTI), my rental property income (2-years), and cash reserves.

Let's say that I purchase a primary residence with a VA loan and the market continues its downward trajectory. If next year my property loses 20% of its value, will this affect my ability to purchase more real estate? Assume 100k underwater.

Would love to hear any advice regarding this scenario. Thanks in advance! 

You could just ask them to do a verbal? If they don't just switch agents.