All Forum Posts by: Thom MacFarlane

A few words of caution:

Frequently sellers have requested buyers to "waive the appraisal contingency" in the contract. You need to be conscience of that in making a offer using your VA benefit. VA has their own appraisers. Thus they are to protect the vet and thus may might stretch an appraisal.

Repair items that cannot be waived are (1) conditions noted on the appraisal and (2) termite clearance in California.

Liam-

While you’re not of age yet to enter into a contract, 18, you’ll be there within a year. In order to get financing you'll need a continuing source of verifiable income (W2 job) or 1040 Fed Tax return (schedule c”) with income sufficient to cover the housing debt X 2.50 times! Even so, your business is Seattle but your “buy” is in Calif or Arizona in which your employment or self-employment doesn’t translate into a continuing source of stable income.

Here is the process I’d recommend:

The best resource you have is your father. Is he willing, assuming qualification, to be a co-borrower/co-signer/co-owner on whatever you buy? If he is financially "strong" enough than you could buy something jointly (with dad) in the college town of your choosing/attendance with just 3 ½ % down using FHA financing. You're the owner occupant in order to get the financing. In my profession, mortgage lending, we refer to this type of financing a purchase as "kiddie condo" financing though can be used for SFRs.

This is but just one idea but you might plan the seed in dad's mind now.

Do a cash-out refinance to tap some of your equity to include paying off your heloc and other debt.

From a lender’s perspective, when buying real estate using a heloc for a down payment, the new payment for the cash advance on the heloc is calculated into your overall debt-to-income ratio. I wouldn’t be surprised, with increasing rates, that lender will re-institute a policy of using an increased “qualifying rate” rather than the “actual rate” on a heloc for loan qualifying.

Bottom line for investment prospects is that it is easier to qualify for a future loans by consolidating all non-mortgage debt and using your cash for down payment to secure financing for your next real estate acquisition.

Bank loans (Fannie/Freddie) on investment properties are limited to 75% loan-to-value thus you’d need 25% equity in a home. Presently rates would be mid-3% for investment property refinance.

Unless you've got a exemption (VA disability) than subsequent use of the VA benefit will cost you up to 3.6 points if you want a loan exceeding 95% of purchase price (more down, less funding fee). Thus you may be better off keeping the VA loan on the rental getting a conventional loan for your next purchase since a VA funding fee of 3.60% of loan amount is a chuck of down payment.

Certainly not a "no-brainer" as there may be several scenarios that may indicate leaving it alone unless you can refinance "cash-out" your investment property OR recover your VA benefit and put 5% or 10% or more down payment to get the best of VA loan terms.

Feel free to PM or call for greater refinance details/options.

Both you and your girlfriend would need be gainfully employed for a year or longer with stable, qualifying income. Conventional & FHA lenders are intended for owner occupant home though conventional lender will do investment lending. Thus any property you're looking at should be with the intent of owner occupancy. FHA you can get in a home with just 3 ½ % down, conventional with as low as 3% down.

Down payment – If you don't have enough saved, perhaps there is a blood relative to gift you enough funds for the down payment, closing costs and reserves. FHA is a promoter of home ownership so they ware significantly more liberal in underwriting.

Wholesaling should be a side hustle since wholesaler may earn a lot on money BUT continuity of income (a job or history of self-employment income) are the keys to getting bank financing and scaling.

Ask father-in-law for a gift of equity. Gift of equity, when selling to a relative, can be used in lieu of a down payment.

HOWEVER, conventional lenders do not wat to be an interim lender and thus the intend would be to occupy the home.

PM me for gift of equity idea if interested.

@wayne brooks is correct in that "you can't borrow for the down payment for a conventional or FHA loan."

You can get a gift for a down payment but it must be from a  blood relative or "like" relative  and the you must explain the close relationship and why the "like" relative would give you a gift. a GIFT for downpayment is money given willingly to a buyer without repayment.

 You cannot get a loan for the down payment as all funds for down and closing are traced and sourced for the preceding 3 months. 

Thus no equity share or borrowing the down payment for a conventional or FHA loans.

@Andrea M.

It is a choice to pay origination fees. The more orignation fees (points)  you pay, the lower the interest rate. 

Mortgage brokers get compensated one of two ways:

Lender Paid- Mortgage Broker is paid by lender in a prearranged agreement. This is generally a fixed percentage of the loan.

Borrower Paid – Mortgage Broker and borrower negotiate the compensation that broker would receive. It can be a flat fee or percentage of the loan.

In most all loan scenarios neither of the above ways of compensating a mortgage broker would result paying greater in fees or in rate as compared to going to bank/lender directly.

National banks & lenders are buyers and aggregators of loans which they package for resell to secondary market for mortgage back securities. Banks like using mortgage brokers as one of their sources for originating loans. Why? It is cheaper for a bank to pay a broker for a loan than the bank to hire personnel, have brick & mortar, HR and myriad of other costs associated with a large scale included bad public relations when the layoffs come with the next recession.

The price you get directly from a bank is called “retail price” since a bank is like a retail store.

The price a broker gets from a bank is “wholesale pricing" since the broker is bringing lender and borrower together. The broker comp (lender ot borrower paid) is added on the “wholesale price.”  The pricing to the consumer (borrower) is still intended to be better than the bank "retail price" of the banks. 

Bottom line: Brokers are better since they get better pricing.

Rates have increased steadily for the past two weeks thus any previous rate quotes are past history. Ideally you'd want to work with  a mortgage broker that can source numerous lenders for best pricing and service. Even then most my good quality loans I narrow it down to two leading national lenders for best pricing. 

The majority of your fees in a purchase are 3rd party fees not related to the lender. The base lender fees for credit report, tax service, processing and appraisal fee amount to about $1800+/- before paying points to discount the rate OR  accepting a higher rate to get a lender rebate to pay some/all or these costs. Not enough to make or break a deal.

Choose and commit to  a r/e agent and don't consider that agent/lender do not need to be a package deal as noted above posters.

San Diego Creative Investors Association - https://www.sdcia.com/Page.asp...

Monthly meetings. New venue in 2021 so I no longer participate but a good resource of investors, lenders, contractors, bird dogs, information and ideas.