All Forum Posts by: Erik Stewart

Wayne,

Great question and the exact question FHA is asking. Like I said in my post, I expect them to believe me because I have lived in this home for 9 years, 8.5 of which were with an FHA loan. This shows a strong track record of commitment to my loan. I believe it is poor timing on the refinance. If we had refinanced 6 months earlier, this would not be an issue. I think that is pretty reasonable. Also, we can wait the 6 months or so and then go forward with what we are doing now. The difference between then and now? Nothing on my side.

Thank you @Mindy Jensen!

That doesn't address my questions in my post. I am asking for experience with and solutions for FHA denying a loan based off the conditions of a completely separate conventional loan. Can you speak on this situation from personal experience?

Thanks!

Erik

Hello BP,

The problem is this:

We refinanced in our home in late November and since then we have found a 4 plex to purchase. We were planning on moving out of our home and into the 4 plex to house hack for a year, while renting out our SFR. However, when we refinanced (conventional loan), we signed paperwork saying we would live here for at least 12 months.

Now underwriting is saying FHA won't let the deal go through because "we would violate the terms of our loan" on the SFR. They also think it is strange that we are moving from a 1600 sq/ft house into a 2 bedroom apartment.

Anyone have any experience with this specifically and advice on how to convince underwriting/FHAthat we will not violate the terms of the FHA loan we are applying for? Is this issue outside of the scope of their considerations.

Note: We originally purchased our home in 2009 with an FHA and didn't violate the terms of that loan, so we have a good history with FHA. Also, the only reason we refinanced was so that we could use the FHA loan product once more, and since we most likely won't refi this upcoming 4 plex,

It is our (my wife and my) opinion that this should not negatively impact their confidence in us.

Please let me know your experience with this and the best solutions on this matter

Much appreciated,

Erik

Hello BP,

The problem is this:

We refinanced in our home in late November and since then we have found a 4 plex to purchase. We were planning on moving out of our home and into the 4 plex to house hack for a year, while renting out our SFR. However, when we refinanced (conventional loan), we signed paperwork saying we would live here for at least 12 months.

Now underwriting is saying FHA won't let the deal go through because "we would violate the terms of our loan" on the SFR. They also think it is strange that we are moving from a 1600 sq/ft house into a 2 bedroom apartment.

Anyone have any experience with this specifically and advice on how to convince underwriting/FHAthat we will not violate the terms of the FHA loan we are applying for? Is this issue outside of the scope of their considerations.

Note: We originally purchased our home in 2009 with an FHA and didn't violate the terms of that loan, so we have a good history with FHA. Also, the only reason we refinanced was so that we could use the FHA loan product once more, and since we most likely won't refi this upcoming 4 plex,

It is our (my wife and my) opinion that this should not negatively impact their confidence in us.

Please let me know your experience with this and the best solutions on this matter

Much appreciated,

Erik

Hello BP,

The problem is this: 

We refinanced in our home in late November and since then we have found a 4 plex to purchase. We were planning on moving out of our home and into the 4 plex to house hack for a year, while renting out our SFR. However, when we refinanced (conventional loan), we signed paperwork saying we would live here for at least 12 months.

Now underwriting is saying FHA won't let the deal go through because "we would violate the terms of our loan" on the SFR. They also think it is strange that we are moving from a 1600 sq/ft house into a 2 bedroom apartment.

Anyone have any experience with this specifically and advice on how to convince underwriting/FHA that we will not violate the terms of the FHA loan we are applying for? Is this issue outside of the scope of their considerations.

Note: We originally purchased our home in 2009 with an FHA and didn't violate the terms of that loan, so we have a good history with FHA. Also, the only reason we refinanced was so that we could use the FHA loan product once more, and since we most likely won't refi this upcoming 4 plex,

It is our (my wife and my) opinion that this should not negatively impact their confidence in us.

Please let me know your experience with this and the best solutions on this matter

Much appreciated,

Erik

Based on the income approach:

For a 4 plex in a B neighborhood accross the street from a school, 2 churches, and a few large employers in a town of 40k. This building was built in 1978, 2 units are 3 bedroom 1 bath, 2 units are efficiency. 2 stall detached garage and parking slab next to garage for 2 cars. Currently being rented for $2,050 monthly, but there is room to raise rents to $2500 monthly. Electricity is paid by tenant. 

Taxes 2800

Insurance 1500

Owner paid utilities: 2000 annually

Onsite Coin op Laundry generates approx $100/month.

Newer shingles on roof, vinyl siding 10 years old, all water heaters are less than 10 years old.

One of the 3 bedroom apts needs new floor coverings and updates to bathroom (current tenant has been there for 20 years approx) will need to budget for repairs for when they move out eventually.

Still budget for property mgmt although I will self manage for now.

**Also factor in that I am trying to use an FHA loan to purchase.

IF I missed anything, please let me know and I will provide updates as needed!

Thanks in advance!

Erik

That is awesome Michael! I am happy you found your passion and are acting on it with no fear! I love it. I look forward to your future posts and success! Good luck!

Erik

Hello!

Quick questions:

How much did you have to put down on the second purchase after only putting down 5% on the first deal? How will you finance the new construction project? What will be the value of the 2 tri-plexes after they are built?

Great story but I would like to know more specifics on deal #2.

Thanks!

Interesting thread! Does this have to be a self directed IRA or can it be any variety?

Thank you for sharing! This is excellent for investors trying to break into real estate. Breaking it down into steps shows that it might not be so overwhelming.

Thanks Jen! I hope things continue to go well for you!

Erik