All Forum Posts by: Daniel Lehman

Kevin, 

Just make sure you are considering the costs of the refi as well. If you refinance and it costs you 3,000 dollars, and you save 100 dollars per month, you have to stay in the property for 30 months just to start seeing the benefit. IRRRL's have a 50 basis point funding fee too, if you don't have disability, so you have to factor that in, too. Depends on your timeline.

Take the loan cost, divide it by the monthly savings and make sure you are going to stay that long. If you are not, you are better off hanging tight.  Especially given the market has done nothing but go up since last year.  

Make sense? 

Daniel Lehman
USMC Veteran

@Christopher Short - The VA could never do any loans if they required that military guys stay in their homes for 1 year after close. It has to be FEASIBLE that you could get into the home in 60 days and stay for a year, but it is far from required.

Daniel Lehman
USMC Veteran

Hey man, the VA loan is a great tool for a house hack. Just be aware of two things:

a) make sure you apply for service connected disability.  If you get 10% or more, you will have your funding fee waived fo' life.  Thats a big savings when you want to buy a 700K home and are saving 3.3% in fee later on down the road.   

b) MAKE SURE you are clear on what you are doing for income.  You have to have 2 years history in the same industry.  If a lender can't figure out how to connect industry experience from the military, they are not good.  It is easy to do because the skillsets in the military are so vast.  But - make sure you don't think you can use military income to qualify for a home once you get out.  You can use civilian income on day one - but you have to connect 2 years worth of INDUSTRY history.. 

If you have any questions, let me know what I can do to help out... 

Daniel Lehman
USMC Veteran

Dude. Save your 40K, do a VA with zero down. You will need to owner occupy the VA, so you can buy a multi-unit, but then you can use the 40K later on to leverage on a DIFFERENT property. OR - if your VA is tied up on the initial property, you will use the 40K as a down payment on a conventional loan. Let me know if I can answer any specific questions for you...

Daniel Lehman
USMC Veteran

Wow. Every time I come on these forums I see people who shouldn't be answering questions about things they don't know about... 10% VA service connected disability waives the funding fee. So - if you get a check, it's waived. FHA is not easier than VA, or Conventional for that matter. Getting loans done is easy. The key is structuring it correctly for your situation. Using the right tools for the job. Sorry to be so harsh, but seriously - people should kinda back off of answering if they have bad info. That can cost people thousands of dollars...

Loaded Question. Depends on your goals. Generally VA is better than conventional, is better than FHA. VA and FHA require the property be owner occupied at the time of purchase - even though you can rent it later. So it depends on your gameplan.

When I was in the Marine Corps, I wish I would have house-hacked a 4 unit. Buy with VA, rent the other three units, and live in one (satisfying owner occupancy) and then refinancing it and doing it again...

But your question is a loaded question.  Would need more details to help structure the right way. 

Daniel Lehman
USMC Veteran

@Jordon Nichols - OK - There are some answers on here that are leading you in the wrong direction.  The real answer is that pre-approval is just an IDEA.  Sure - there is documentation that goes along with it, such as a credit report and pay stubs that can expire, but if that credit report or paystub has the SAME DATA in 90 days, the information is still good - therefore your approval is still good.  

A couple of points. FHA is going to require down payment, give you a 1.75% Funding fee, and a .85% Mortgage Insurance that is permanent and you will have to refinance it to remove it, so it is VERY unlikely that you should go FHA. The order of quality of loans is (in most cases with some exceptions) VA is better than Conventional - is better than FHA. FHA is generally a stepping stone to a conventional loan. And in most cases VA is better than Conventional...

With VA, you have to have a 60% max Debt to Income ratio. Meaning - your new (prospective) house payment PLUS other debt has to be under 60% of your gross income. So, take your BAH, BAS, and Base Pay, multiply it by .6, subtract your debt, and then you will have your max qualified payment. Now, if that information stays the same, your approval STAYS good! It doesn't change unless the data changes. If you buy a boat, obviously your debt goes up and your approval is affected. Yes, you will have to update documentation, but thats what I mean by pre-approval is a concept, and as long as you have an understanding of that concept and you don't screw up your numbers, your pre-approval doesn't expire, really.

So, thats why I say pre-approval is more of an idea than anything.  Most people here are saying the pre-approval expires because the DOCUMENTS expire.  But if the updated documents reflect the same data, the approval will be just as good, because the loan guidelines don't really change.   Make sense? 

So - another thing - you are wrong that you shouldn't get pre-approved right away.  Why?  Because a pre-approval (if done correctly) is really just a gameplan.  You can find out right now what to expect.  What to fix if necessary, how to get into the best possible position to buy.  Then, you don't update your documentation every 90 days, you just don't make any fundamental changes that would cause you to lose the ability to qualify.  But that is all in the education.  

VA loans (and FHA for that matter) are only for owner occupied property. So, you have to move in within 60 days. That does NOT mean you don't get pre-approved. Get pre-approved from someone who will EDUCATE you. PLAN with you. ADVISE you. With typical banks, yes, your pre-approval will expire and they will ask for more stuff. But any true value-add lender worth his/her salt makes it more about education and planning and advice, than just sending in documents with an expiration date. So it may be too early to buy, but it is NEVER too early to plan...

If you have any questions or need anything, I'm here to help.  

Daniel Lehman
Marine Corps Veteran

@Dylan Mathias I think we are due a correction, but you have to remember that pre-2007 we were giving loans out like candy. Gardner making 500k per year? 700 credit? Sure! Buy those 5 rentals! Since that point finance has swung the opposite way. Massive documentation and vetting, no neg-am, etc. So I think it is far more built on the rock. I am in San Diego and the market has increased a lot, but demand still seems to strip out supply. Builders have a good outlook obviously because they are building like crazy. I think a slight correction is probably right, but potentially due to interest rate increases. Not fundamental flaws in an overblown market. Buyers care about payment, sellers care about price. So I see a softening, but not a bubble, and certainly not 2007-ish. My two cents - could be wrong as my wife will remind you... Daniel Lehman

@David Smith Generally speaking, VA is better than conventional, is better than FHA. If you can go VA, go VA. Refinance conventional and free it up and use it again. Conventional allows for as little as 3% down for owner occupied, and FHA will only allow Owner Occ as well, so that may be a good option. Basically, if your credit is good, go Conventional. If it is Mid-600's, go FHA. FHA has higher fees, an upfront Mortgage Insurance Premium of 1.75% of the balance (rolled into the loan) and .85% MI. With good credit conventional is cheaper, generally speaking. Someone just needs to help walk you through the plan. Where are you buying?

Daniel Lehman

@Jo-Ann Lapin thanks Jo-Ann!