All Forum Posts by: Chris Mason

 A lot of new construction is done via owner financing, in that the builder/owner owns the in-house lender. The in-house lenders typically only offer vanilla Agency financing, however, so it's unlikely their standard owner financing would be a viable solution if the reason for seeking owner financing is that you can't qualify for a vanilla mortgage. 

 Minimum property standards to refi with an Agency mortgage are identical to minimum property standards to purchase with an Agency mortgage. So if it's purely a speed issue, yes that could work. If it's a property condition issue, it would not work. 

A seller may be creating a speed issue to hide a property condition issue, take note. Any time a used car salesman says "you have to buy today, or this car/price/whatever could be gone tomorrow!" you should probably tell them to F off. So watch out for that. 

Three big things to know:

- How much you contribute isn't going to impact the lender's calculation of your income. We use gross income, not net.

- Without any tax penalties or funny business, you will be able to pull out the lesser of 50% or $50k, whichever is less, in a 401k loan. 

- The payment on the 401k loan will not be counted as a monthly liability, and you can use the borrowed funds for down payment, cash to close, etc. Neither of these things is true of 'normal' loans.

 The folks above are correct that you can check out the county recorder's office / public records, which may entail having to go down there in person during gov't work hours.

You can also ask your realtor or loan officer, who may be more available, and can send it to you via email. 

You can also pay a title company for the same report -- they give loan officers and realtors free access. 

This will not tell you the current balance, however. It'll tell you a $500k conventional mortgage was recorded in July 2021, you can infer from the ownership record that it was a refi (same owner before/after), and you can ballpark that rates were around 3%, assume it's a 30YF, so the balance "should" be X, but you have no way to know if they made a large lump sum payment, pay extra each month, etc. 

You can also infer other things. For example if someone has owned a house for 5 years, but did NOT refinance in 2020/2021, they left thousands of dollars per year on the kitchen table, which most people will not voluntarily do if they have another choice. So maybe they didn't have another choice, maybe they had lost their job and couldn't refinance. Which in turn could give you insight into their financial position. If they took forbearance (which you can only speculate on) and didn't make a payment for 12 months, their current balance would likely be higher than what the guess from the above paragraph would indicate. 

Ultimately it's all guesses, and if they have a listing agent, being able to use this will be limited, part of the whole point of having representation is to blunt such efforts. 

The "you should refi!" junk mail, from random companies, with spookily accurate details on your current mortgage? This is where that comes from. 

The ~$140k number you are referencing is the "VA Guarantee" to the lender of 25%, you 4x it for max loan amount with 0% down. It also scales up in HCOL counties. (By using ~$140k, you're indirectly referencing 25% of the 2021 conforming conventional loan limit, so I'm guessing you read $137,062 on a VA COE issued during calendar year 2021 that you came across for some reason and "about $140k" is what your brain stored)

But for folks with no outstanding entitlement, that limit was tossed out the window right before COVID, one of my main wholesale lenders is doing $4,000,000 VA loans on up to fourplexes with 0% down as of yesterday (how smooth was that California military veterans relevant plug, and that keyword/SEO drop right there? :P ), but that ain't gonna happen if you've got some $220k/4 of entitlement already used up somewhere else, even if it's by a non-veteran who assumed your loan.

 In the overwhelming majority of cases, if enough documentation is gathered, etc, base salary (or hourly pay if you consistently work 40 hours/wk) can be counted at 100% of value right away. So I'd suggest starting with a job. 

Pragmatically, you need to figure out what's more important to do first. 

If buying the house right away is most important, go get that boring W2 job. And start the entrepreneurial thing a day after you have keys in-hand. 

If being entrepreneurial is most important right away, go for it. And buy the house after you've got that income on 2 years of tax returns. 

That's an interesting angle, most important thing is that the seller/veteran understands (as yours does) that while that VA loan entitlement amount is tied up in the house they sold, they can't use it again. And if that entitlement is tied up with someone else that's sitting pretty at 2.25%, you must assume it'll never be refinanced or paid off, so that's it for your lifetime VA loan entitlement.

It's also a niche buyer, to be sure. They get to assume the in-place interest rate, they're also assuming the in-place loan balance. So if you're looking to sell for $500k and have an in-place $225k VA loan that's going to be assumed, they need to have $275k to put down, unless you want to carry a note (I see that light bulb that just lit up over your head, OP :P ).

Pragmatically, I don't think this is for buyers or buyer's agents to ask about, that would be throwing spaghetti at the wall, unless maybe the home is in a military base town. More realistically, if there's a veteran willing to give up re-using their VA loan entitlement amount in exchange for top dollar on the sales price, that's for the listing agent to proactively put in the listing description, and have a stock flier/email to send back when inquiring buyers/agents ask. And if the veteran/seller isn't willing to carry a note and moonlight as a mortgage loan servicer, very quickly/aggressively filter out people who do not have substantial down payments (sales price - current loan balance = minimum down payment).

In terms of timeline, don't plan for it to be a fast process, your rockstar local loan officer will not be processing the assumption, it'll be a group of call center people reading scripts from a computer screen. If you get a single or primary point of contact, call that a win and count yourself lucky. 

Good luck. :)

 Back in early 2021, FHFA (the federal gov't entity that currently dictates policy to Fannie and Freddie, which are 'in theory' private sector corporations) capped 2nd homes and investment properties at being 7% of each individual bank's portfolio as a hard cap, with a 52-month lookback. The problem was that 52 month lookback might have been 12% or 15%, so the only way to bring that average down to the target 7% was to do very very few rental property loans for the next 6-12 months, or at the very least charge the borrower proportional to the penalty they'd pay for being over 7%. But you obviously can't call it a "we want fewer customers like you" fee, so you just bill it as "discount points" and call it a day. 

The hard & fast 7% and the 52 month look-back are gone, but many places are still trying to keep their % of rental/2nd homes in the single digits (with smaller average loan amounts and more person-hours to process/underwrite, they were never the most profitable niche for banks anyways, and the precedent has been set by FHFA that you as an individual bank can be punished after the fact and without advance notice if you do too many of them). There remains a far greater variance between lenders with 2nd homes and investment properties, than there is variance for primary residences, since regulatory uncertainty is obviously going to lead to private sector actors tacking drastically different courses. That's why, for these loans in particular, it's important that some shopping is done. Shopping a bunch of direct lenders & banks against each other, or calling a mortgage broker, will have substantively similar results (I of course will share the biased perspective that I think calling a mortgage broker is better, but feel free to ignore that if you prefer :P ), but someone needs to take the time to do some shopping. 

Details on the 7% requirement, and it's removal as hard/fast with a 52 week look-back --> https://www.housingwire.com/ar... 

 Call a local mortgage broker next time. You would have done significantly better (unless this was locked at the mid/late June rate peak).

That's generally sound advice, but if you don't have time/inclination to shop it around, it's especially good advice. 

Gotta shop it yourself, or find someone to do it for you. Doing neither probably wasn't the wisest choice (& doing both is somewhat redundant). 

All well. Any mortgage you take out today is going to be refinanced in a few years anyways. 

FHA loans are great for the 2-4 unit aspect, but for SFR they generally do not make sense if you have good credit.

But that's ok, because in the SFR space, you can do 5% down conventional over, and over, and over, again, once a year. That's not just for FTHB, and people that own a rental or two aren't excluded either. The successive owner occupancy requirement is one year each time.