All Forum Posts by: David Kelly

Hi Laura, 

One thing that comes to mind, if you have enough cash, is to setup an annuity.  This would entail a large amount of cash, depending on how much monthly income you need, to be placed in an account that pays you back every month over 3 years time.  I know its not the most favorable, but if there is a bunch of cash on hand it might be an option to qualify.  For example, $200,000 over 3 years would produce roughly $5555/mo in income that can be used to qualify.  We would need to show minimum of 3 years continuance.  You would also earn interest with whoever the money is placed with.

If you are lowering your payment it will only help.  If you are doing a cash out, however, and your payment goes up it will affect your Debt to income ratio.  Keep in mind you will need reserves, 6 months that you can show in your bank account or some other form of money that can be withdrawn in hard times when buying the investment property.  So if you are refinancing and end up bringing cash to close, make sure you still have enough in reserves.  Have you started the refinance process yet?  I would be happy to show you what I can do as far as rates/costs.

@Kwame Amoako

As long as you can withdraw any time, penalty or not, we can count it. We would only be able to use 70% of the total value.

@Ashley Keeler

Qualifying for Investment properties requires 6 months of reserves, even if you aren’t bringing cash to close. This is why they are requesting it.

Most assets like stocks, 401k, bank accounts will work as long as they can be withdrawn.

VA loans are assumable, some FHA ones are as well. Conventional loans are not.

@Ian Huber

Hi Ian,

To take advantage of the low rates you’ll want to avoid the commercial loan. Higher interest rates and the Maturity date will be less than 30 years in most cases. 

As far as qualified for the loan one or both of you can do that and if you would like to transfer it into an LLC after or at closing all we would need to do is a quit claim deed. If you want to refinance later on you would do another quit claim deed back into your personal name which can then be reversed again.

I do new construction loans in that area so feel free to reach out this week. I’m going to want to check the guidelines with Covid to see if anything‘s changed in the last month or so. 

@Francis Nguyen

Hi Francis, you won’t be able to get away from transfer taxes with the state doing a refinance, but we can quit claim deed your uncle off of title. At a 7% rate, You should see some significant savings. I do business in PA if you have any questions feel free to send me a PM. 

Have them look at your liabilites on your credit report.  Something might be able to be removed.  

*Are there any debts on your credit report that are paid by someone else, or a business?  You will need to show 12 months history of that debt being paid by them.

*Are there any liabilities that are coming close to being paid off?  If it has 10 months or less you can exclude it. If its a car lease, it needs to be included.  

*Are there any student loans on your report? If so, Fannie requires you to use 1% of the balance as the payment, however, Freddie requires only .5%. This will lower the payment liability and lower your DTI.

*Can you pay off any small balances to remove that debt?  

*If its a cash out refinance, can you include paying off these debts/removing the payment within the cashout?

Hope this helps! I do this initial scrub even if the DTI is ok. Lower DTI means a better cost on the rate which saves money!

@Andoni Garcia

Hello Andoni, it is not any harder for most lenders to work with this type of scenario, as long as they are licensed there. Everything can be click signed up until the final closing, then use a mobile Notary in your hometown. very simple process! 

@Sarah Z.

There is a chance that a lender can put in a higher value and get property inspection waiver and not need to have it looked at. In this case you can just use that value and finish up the loan. Right note they are easier to come by.

I wouldn’t use Zillow as a solid reference. Do some of your own research and look at similar homes in your area and what they sell for recently.