All Forum Posts by: Chris Mason

https://singlefamily.fanniemae...

The paragraph you are looking for is paragraph 6, for both my state (California) and your state (Alaska). That's the document you will sign at the closing table, refi or purchase. Note that there's an extenuating circumstance clause, but if you're planning for it today then it's almost certainly not an "extenuating circumstance beyond [your] control." 

That's for the cash out refi.

For the HELOC, there is more variance, each bank/lender is doing their own thing. You may find that such a clause does not exist. You may also find that, after the HELOC lender is notified that you changed your homeowner's insurance to be a landlord policy, the HELOC is simply cut off entirely.

 The only time I've seen that income able to be counted is when it appeared on Schedule C. In which case it's basically no different than running a daycare center, or bicycle repair shop, or amazon dropship biz, or mortgage business for that matter, out of one's home. The issue is that, I am told, lots of CPAs do not like reporting rental income on Schedule C. I'm not a tax professional or in any way qualified to comment on what's OK with the tax code, one must assume the CPAs aren't all doing drugs or making things up, however.

If I were trying to convince my CPA to report it on Sch C instead of Sch E, I would point them to this: https://www.irs.gov/taxtopics/...

For that SFR you live in wherein you rent out 4 bedrooms... I assume that you change the toilet paper, clean, mow the lawn, grocery shop, etc, etc, no?

Disclaimer again, I'm not a tax professional, the guidance of a qualified tax professional should be assumed more correct than anything that I say as it pertains to the tax code. 

 I assumed you were already licensed. I didn't comment on licensing.

Go be a loan officer. Do 100 mortgages. Super easy.

 Start by being a loan officer. In the course of doing that, you will learn all the things you need to learn, do, and know. 

 Others already talked about the advantages of locking up-front ASAP in a rising rate environment. 

As rates trend up, individual banks and lenders don't necessarily keep increasing the rates. Beyond a certain point the odds of the person (that's you) refinancing in 6 or 18 months gets higher and higher, representing a potential future loss of revenue. Once that point is reached, you're at the "top" of the rate sheet, and they bake it into points/fees/etc instead. 

iPhone prices are based on probability of getting 2 years of payments and that 2 year contract. If those 2 years of payments are less likely, they will increase the price of the iPhone. This is the mortgage version of that. Or we can use a car metaphor: they can give you a great sticker price (low points) on the car if it's likely they will make up for it on the car loan. Lo and behold, once in a while you hear a story about a CASH buyer having to pay a HIGHER price for the car, and that's why. Or, we can go right back to real estate: when you buy a new house from a developer, they're always going to give you bribe to work with their in-house lender. In effect, that's a price reduction, because they're going to make up for it on profits from doing your mortgage too. But if you go somewhere else for the mortgage, there's no more back end profits to them from the loan, so the house price goes up (via the mechanism of a lost "discount" or lost "incentive").

 It's standard, though how and when it's collected will vary. Charging upfront when they run credit is unusual, most of the time it's just either a line item fee, or a baked in fee, at closing.

Three ways to accomplish the same thing:

- Charge upfront, like your person is doing.

- Have a $30 or $60 line-item for credit report.

- Have an "underwriting fee" or a "processing fee" that's mysteriously $30 or $60 higher than it otherwise would be.

if you trusted your Realtor, you wouldn't need to ask this question. But you did ask, so you don't trust them. I'm also going to assume it's a 'hot market' and your priced the home to move, etc etc. 

Assuming that is all true:

Throw the offer in the trash, and tell your realtor why you threw it in the trash.

Whelp, that's a lot of confusing answers to a simple question. I'll give it a whack.

 Assuming a normal vanilla Fannie-type loan, the folks doing the mortgage need to be licensed in the state where the house being lent on is located. In your case, the folks doing the mortgage need to be licensed in PA, but they do not need to be licensed in New York.

Real life example, a Texas doctor buying a wine country estate vacation home in California. I did the mortgage. I do not have any sort of licensing in Texas, just California, where the house being purchased is located. Someone in Texas could have done that loan, but Texas licensing would have been irrelevant, they would have needed their California licensing, it's a California-regulated transaction, no one cares about Texas in that case. 

There are in fact mortgage people who live in "flyover country, cheap real estate" areas that don't even bother getting licensed in the state they live in, but have their licensing for multiple states where real estate is more expensive (California is of course always on that list). 

Unfortunately, this is fairly run of the mill for the DSCR and "alternative documentation" type loans.

When rates trend down, they extend locks for "free."

When rates are trending up, they find reasons to delay/etc, and will not extend rate locks.

There's no way around it, and the reason that direct lenders / bankers who dabble in brokering loans only of this type (the ones their employer doesn't want to touch, but at the same time wants to make their bankers happy) think brokered loans are painful is because these are the ONLY types of loans they're allowed to broker out (because the bank they work for doesn't want to touch them).

I do these types of loans once in a while, but I caveat/warn so much that most of the time people take their biz elsewhere. In fact OP you may have spoken to me 3 months ago (I wouldn't remember), and I would have told you in advance about how this sort of thing can happen, so you "shop around," find someone else offering exactly what I offered, from the exact same very small pool of lenders, identical rates/fees (+/- rate movement over time), they don't include all the caveats/warnings that I did, so you think it's more reliable or whatever, fast forward 2 months, and boom here you are making this thread (incidentally, this means my "incentive" is to just drop all the warnings and caveats, and then act all surprised when exactly what happened to you happens, like I didn't know it was a possibility from the get-go). 

 Move to the standard 25% down for rental properties, pick up 125 bps. 

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