All Forum Posts by: Corey Westermann

My lender is Quicken. Depending on who I talk to there I get a different answer every time regarding when I'll be done making premium payments. 

I guess I was hoping somebody here would know for certain whether the refi amount was also considered the "initial sales price" in which case I'll be making insurance premium payments until I reach a loan amount of $198k.

@Stuart Birdsong

The provisions of my loan require that a mortgage insurance premium be paid both for 60 months AND until a LTV of 78% is reached.

@Matt Motil

Thanks for the response. I've confirmed with the lender than the MIP will drop off - I just can't get a straight answer from them as to what value the FHA will use to calculate when that will happen... $255k was the refi amount so will they consider that the "initial sales price" or will they use their appraisal figure?

This is straight from HUD:

“Effective for all loans closed on or after January 1, 2001, FHA’s annual mortgage insurance premium will automatically be canceled-once the unpaid principal balance, excluding the upfront MIP, reaches 78 percent of the lower of the initial sales price or appraised value based on the initial amortization schedule and pursuant to instructions contained in ML 00-38. Although the annual mortgage insurance premium will be canceled as described, the contract of insurance will remain in force for the loan’s full term. This mortgage insurance premium cancellation provision applies only to loans insured under the Mutual Mortgage Insurance (MMI) fund. The MMI fund does not include mortgages on condominiums or Section 203(k) rehabilitation loans, among others.”

I refinanced one of my houses into a 30yr FHA loan back in January of 2013.

The FHA appraised value of the property at the time was $326k. The loan amount for the refi was $255k.

Since closing occurred prior to June of 2013, the FHA rules say that the annual mortgage insurance payments will be cancelled after 5 years AND an LTV of 78%.

With an interest rate of just 3.25%, I'd really like to keep this loan and wait for the mortgage insurance payment to cancel. But I'm uncertain of when that will be. Will the FHA use their $326k appraisal as the original value or the $255k refi amount?

Thanks!

Hi Kolbi - congrats on the baby! Portland is a great market for what you are hoping to do. What's your plan of attack to start wholesaling? There are some great real estate groups and meet-ups around town, message me if you're interested in more info. Best of luck!

We have a clause in our lease agreements that requires tenants to obtain a renters insurance policy and also send us a copy of the declarations page every 6 months.

We don't specify limits, as the amount of coverage is largely dependent on the value of their belongings.

We also require a pet rider on the policy if they have a dog in the house. 

Our thinking is that forcing a renters insurance policy makes it less likely that the tenants would come after us in the even of some kind of property loss. I honestly don't know how much protection it actually provides us as owners though.

Rarebird Investors & Northwest REIA are the 2 groups that were recommended to me most frequently when I first started searching for meetups. I've been impressed with both. Both will let you try the group out without any commitment.

@Tyler Kaye

Mind me asking what your current criteria are? 

I've only got a few deals under my belt, but I'm a firm believer that setting and sticking to rigid criteria is one of the most important things you can do, especially in the beginning stages of an investment career.

For how often LLCs are touted, it does seem interesting (maybe even telling) that in a community as large as this one almost nobody has a first hand experience where an LLC saved them from damages that an ordinary insurance policy could not.

At least from my experience in residential properties, I think seller financing can be just as valuable for the seller as for the buyer.  As the seller, you can get a big chunk of cash up front, monthly cash flow, high interest, and none of the work of a landlord. 

Here's a few thoughts off the top of my head regarding your specific situation...

Why can't your buyer get traditional financing and does that make her a risky borrower? I'd dig deep into the reasons behind her being unable to get a relatively small commercial loan.

I'd push for more than 5% down... On a $290k loan, I would want my buyer to have more skin in the game than $15k.

What would the tax implications be if she refinances or pays off the loan early? Depending on the terms it's probably a safe bet that she's going to make every effort to find cheaper money and pay you off as soon as she can. Unless there's something in the terms that prohibits her from doing so, there could be some significant tax implications when you get a $290k check that you weren't necessarily expecting.