All Forum Posts by: Chris Mason

I'd suggest also exploring commercial financing options for this. 

 That sounds like a regional bank thing - "XYZ County Savings Bank," as a regional bank, might be limited to only servicing clients who live within their county footprint, for example. 

Reach out to mortgage companies and mortgage brokers local to that specific area. "ABC Mortgage" or "DEF Home Loans" will not have such restrictions. 

Go get all the mortgages you're going to want for the next 2 years out of your system, AND THEN go start your new business. Home purchase, refinance, HELOC, whatever. You can't rely on "maybe" and loophopes (which may be fleeting) when it comes to stuff like this, if want there to be certainty, then I'm certain you should go get all the mortgages out of your system now. 

I did this personally when I went from mortgage banker (W2) to mortgage broker ("1099" - not really but close enough) some years ago, because it turns out what's good for the goose is good for the gander. I was eager to get going, so I did a refi a little earlier than I otherwise would have done, and got a "you never know" HELOC that I never wound up needing/using.

You can "lay groundwork" while getting a mortgage, for example if you establish an S Corp, or get a new license/credential, without quitting your current job, then your current job's income will still "count." Obviously don't tell anyone at your current place of employment that you're thinking of making a switch.

The loan mod into a 40 year term is plausible.

The loan servicers (old and new) "not doing a good job of reaching out to her" is not plausible or likely.  

Investors shouldn't do this because that was far from a guaranteed outcome. There was a flowchart that the new loan servicer took her down, a series of both documents they collected and questions they asked, and she answered in such a way that she arrived at the end of that flowchart at a 40 year mortgage term. Her credit is probably trashed. And she likely has no idea how she answered the various questions, nor what the criteria were (was it based on her being moderate income? And was that moderate income relative to her census tract, her county, or the state? Etc etc). So there's no way to consistently reproduce this outcome.

The fallout of 2008 produced a bunch of "loan mod gurus." Some of them lost their real estate license, some are on the Freddie Mac Exclusionary list (meaning FHA/VA/Fannie/Freddie will not do ANY loan, ever, on any transaction that these people are involved in [even if they're involvement isn't as a buyer/borrower] -- basically the 'no fly list' for mortgages), and some are in prison. What the loan mod gurus didn't produce was consistently positive outcome for their clients.

The lender isn't being shady. Incompetent, perhaps. 

All the things you listed can legitimately change the cost of PMI, and lenders (both the individual MLO you are speaking with, and the bank doing the loan) aren't allowed to make money off of PMI being higher.

 Your loan officer can look up the recent mortgage origination history and ballpark it in about 30 seconds. We can't see their payment history, but we know if they got a $525k refi in July 2021 their rate is X% and if they've neither missed payments or paid extra, they would likely owe such-and-such dollars. 

It's the same source of information that resulted in you getting a bunch of refi junk mail in 2020/2021.

A LO familiar with investment property loans will still be able to use the rental income to offset. If it's cashflow negative $200/mo, then they only have to count that $200 against your DTI -- not the full $2500 that the mortgage payment might be.

As always, depreciation and a few other things are also "added back," so it might not actually be calculated as a negative number even if that is the bottom line number on your tax returns.

The IRS has a minimum interest rate. Anyone charging less than that, the IRS will treat it as a gift. Among other things. You will likely want to retain the services of a private mortgage servicing company - they will also likely have all the other 'things' you need, as well. 

If you have the equity, HELOC, no question about it.

- lower fees. A lot.

- easier/faster process -- no draw approvals or any of that.

- your builder will not charge you extra for having to deal with BS.

Only downside is that HELOCs are all adjustable rate mortgages. Dangerous for the long term, but once the construction is done you will likely take out a mortgage on it to pay the adjustable rate HELOC off entirely anyways.

Offered through many different lenders, nothing exclusive here. 

Live this week. 

It's a 2nd mortgage for up to 20% of the sales price. 80/20, partying like it's 1999.

No payments on the 2nd, no interest rate. If they invest 20%, they get 20% of any upside appreciation when you sell or refinance, to fund the program. So if you buy a $1m house and take $200k of assistance for the down payment (because now that's a thing, ha), and it sells in the future for $1.1m, you will have to pay back $220k -- the $200k you borrowed, plus 20% of the $100k of appreciation. You don't have to take the full 20% of assistance, and if you take less, the shared appreciation is less. 

The income limits are very generous. $282k in Alameda / Oakland, $211k in San Diego, $223k in Sonoma, $202k in Sacramento... and they hate Hollywood, because in Los Angeles borrower income is capped at $180k.

The reason it edges into real estate investing territory is that it only has your standard 12 month occupancy promise. Most DPAs make you pay them off (sell/refi) the moment you move out, this one does not, just that standard first 12 months that you must personally owner occupy. After that, you can rent, STR it, whatever you want. SFR/condo only. First time homebuyers only, among other things.

Rate on the 1st mortgage has been pre-negotiated by CalHFA to be perfectly average (today a tad below, but just a teeny tiny bit) -- which is actually really good, most DPA have vastly higher than average rates (to fund the program, but this program is funded by the shared appreciation). 

Income limits: https://www.calhfa.ca.gov/home... 

Who can offer: I'm guessing just about every loan officer in California will have this in their tool box within about 2.541 seconds, so work with whom you like. :) It's not going to be the best option for everyone, but if someone is eligible and didn't request a side-by-side with 'vanilla' financing, they'd be doing themselves a disservice.