All Forum Posts by: Greg Dorn

With multiple loans you have to be able to cover all the debts on your credit report with under 50% of your income. A few key points are: 

For qualifying purposes you can count up to 75% of your lease agreements. 

You can add back depreciation from your tax returns because it is a paper loss and since you are only allowed to count 75% of lease income they dont hit you twice. 

If you can also prove that something on your personal credit is a business debt and your business has paid for for the last 12 months then that can be taken off. 

If you are moving and going to turn your current primary (house 1) into a rental you cannot use that rental income for your next purchase (house 2). But when you do it for your next purchase (house 3) you can start counting the income from house 1. 

Probably going to need to be a private money lender since most mortgage brokers and banks will not do a loan under $100k. 

For portfolio loans the label is used in 2 ways. There are portfolio loans where you are refinancing your properties into a single loan (commercial product and higher rate) AND there is a bank's portfolio loan where they are not going to sell the loan to fannie or freddie (these limit loans to 10 per person). 

SO hate to say it but you just need to look for a bank that keeps the loan in house. Good luck and probably going to be a smaller bank. 

 Just do something that you can house hack with, it is easy and less likely to make a lasting mistake. Also there is a comfortable and profitable scale and they have an inverse relationship. The more comfortable you want to be (duplex means you still have privacy) it is harder to find a deal and you may not be as profitable if you were just get a very large house and rent out buy the room. Just listen to lots of podcasts on house hacking. 

Hey @Jimmy Lieu so any time you are below 20% equity you will have mortgage insurance (on conventional it is PMI or private mortgage insurance not MIP or Mortgage insurance premium). It is just the cost of not having skin in the game but the main thing is that you only have insurance on the 15% that you are not bringing to the table. Best part is that once you get to the 20% equity you can get it off the loan with out having to refinance like you do with FHA (Also FHA does have a 1.75% upfront premium in insurance).

So you can make your case to an appraiser if your argument is grounded in reason. There are the comps always but if your rents are better you can ask for an appraisal focusing on the rents. With residential mortgages you will use the GRM (gross rent margin) which is your value divided by your annual rents. CAP rates are for Commercial loans and GRM is more for residential. The nice part is that there is less flexibility with the GRM because it is just looking at the rent and the purchase price. Personally I work to get a GRM of 11 and I do have appreciation in my market so that number works but it hard to get so it is a great deal as long as it is in a good neighborhood.

With qualifying conventional loans a single family as rental rates would likely be in the 3s but with a 4 plex it is not going to be as good. You would probably see something in the 5s. 

There are qualified and non qualified mortgage options available. For other lending programs you need to talk directly with a mortgage broker and remember that what is offered is going to change depend on overlays for each lender and on what programs are available. 

@Sam Stabler I second the point that mortgage occupancy fraud is the #1 form of fraud. There are also seasoning requirements for refinancing so you would be better to do a HELOC but you still need to ask about and confirm in writing if there is an occupancy clause. The other main thing is if you have a change in circumstance and can present a reasonable need to move you may be able to move early.

We refinanced just this year but are considering moving again because we are trying to have another child and would need the room. 

I am a broker and it is important to keep checking different lenders. We just had a lender come back online after 4 months and they do non qualified mortgages and for other lenders they are changing their overlays all the time. 

@Nahal Beckam So I actually work as a lender and tell people the APR is not really that important because your cost of doing the loan are part of the APR but are only at the beginning of the loan. You just need to consider your total interest pain on the life of the loan and how long you expect to keep the loan. If you keep it forever and pay off the loan then get the lower interest rate.

With your two options 

A: 650K @ 2.75% on a 30 year fixed rate note = $2653.57 p&i monthly payment. 

Lifetime interest is $305284

B: 650K @ 2.875% on a 30 year fixed rate note = $2696.80 p&i monthly payment. 

Lifetime interest is $320848

The difference in the monthly payments is $43.23. Assuming you loans are the same starting balance and you pay all the closing costs up front (which is the lowest cost way to do it) You pay ($1450-$400) $1050 more for the 2.75% rate and you will break even at ($1050/43.23) 24.28 months. As long as you provided accurate costs and keep the loan more than 2 years the lower interest rate is better.