All Forum Posts by: Jarod Dudley

@Andrew Postell

I understand that If the property cash flows more it could be hurt for your less, but it rarely helps DTI.

Regarding the example-

10k income and 3k PITI at primary is 30% DTI, is generally acceptable conservative ratio for housing, the actual numbers aren't really important- but for arguments sake we could lower it to $5k income and $1.5k PITI (still 30% DTI)

Even at $3000/mo rent and $1500/mo PITI it would still actually hurt the DTI , and bring it up to 37.5%

It wouldn't help until rents more than tripled PITI.

That's why I say, in general- adding to the portfolio will help an investors income absolutely, but it usually hurts DTI.

@Melissa Tannehill

There are owner occupied bank statement loans, they use cash flow in your account to determine income instead of tax returns. Many self employed borrowers like these because then you don’t have to worry about your tax write offs being to high

You need at least 12 MO to qualify.

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Many borrowers can also qualify for conventional loans with 1 year of tax returns/self employed if your w2 position previously was the same field.

Good luck!

Mortgage Jarod

@Andrew Postell

@Jack Zhuang

As you add rental properties your DTI will be usually be negatively impacted, even if they cash flow.

I.e.

Earned Income $10k/mo

Primary residence PITI $3k/mo

DTI 30%

Add an investment property with

Rent roll $3.2k/mo

PITI $3k/mo

New DTI 45%

If you run into DTI issues there are tons of competitive portfolio loans that look at debt service ratio instead of DTI to determine your ability to repay.

Good luck!

Mortgage Jarod

@Shiloh Lundahl

“Yes. It has worked 3 times in the past few months and it is about to work one more time on a 14-property portfolio loan before the end of the year.

Many of my properties are not on my taxes last year because I purchased them this year, or several that are on my taxes were purchased some time during the year last year so it would be difficult to get an accurate full year income from each and every property.

The banks that I use see my investing module, they see that it is sound, and then they will lend to me a certain amount and see how I do with that. If I do well with it, they continue to lend me more. I show them verifiable personal financial statements and I keep their reserve limits in the bank and they eventually lend me more money after a big fight with the underwriters. But the fight is expected because my financials are complicated.”

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Congratulations! Its very surprising because that’s not how lenders typically verify a rent roll.

For properties that are owned less than a year most lenders use market rents which are determined when the property is appraised. Otherwise people could write leases for $1,000,000 per month!!

it sounds like you must have a unique situation, but for anyone buying or Refinancing 1-4 units with Fannie/Freddie/FHA/or hard money- this would not fly.

@Shiloh Lundahl

When using “proposed rents” on a vacant property underwriters go off of the appraisers rental value or the lease value, whichever is lower.

When using rental income from a property you already own, underwriters look at your taxes to see what you actually collected.

Inflating your lease, or making It more complicated won’t change how much the appraiser says it’s worth, and it won’t change what your tenants actually pay.

Has that ever actually worked?

@Ani Kap

Many lenders have rate bumps for loans under $100k, and for non owner occupied properties.

The rates are not based on making profit, but have more to do with risk.

Loans under $100k default more often than loans over $100k, and similarly non owner occupied properties default more often than owner occupied.

Your fixed loan costs like underwriting (usually around $900-$1,000) and appraisal (usually $500-600) will remain unchanged regardless of loan size, however at lower loan amounts, they seem more expensive... I.e. $1500 in fixed costs on $80k is 2%, whereas on $300k it’s only .5%.

I think it’s fine to shop around, but if you’re going to invest regularly, I would try to prioritize finding a lender who you can trust, in general most lenders will be within 1/8 of a point of one another. In the long run a good lender can be much more than just the cheapest rate. Having a relationship with a knowledgeable professional who can close your loans quickly, and hassle free, will make it much easier to focus on finding more deals down the road!!

Good luck!

@Christine Hull

You’ll probably get hits on your rate because it’s a condo instead of single family, and it’s income property instead of primary residence.

It doesn’t hurt to shop though!

Rates are great right now, but I just wouldn’t expect to get the same rate as you have on your house for this one.

With Condos the bank has to rely on the HOA to maintain the building, otherwise the property can lose value, and the bank can't control that.

Also, borrowers are more likely to let investments properties go, than they are to let there homes go, in the event of financial hardship.

These additional risks factor into your rate.

@Jay Miles

Fixed rate ?

3/1 ARM 5/1 ARM? 7/1 ARM?

What is your credit?

@Jay Miles

1099 is considered self employed, most lenders will need at minimum 1 year of self employment before they can use it.

Honestly though, if you're doing 20%+ down, skip the headache of conventional underwriting and go with a DSCR mortgage.

These Loans are competitively priced, with no tax returns, no pay stubs, no debt to income ratio, no headaches. they look at property cash flow, and your credit, and the LTV, but no hassle regarding your employment history.

Message me If you want to chat

@Guy Noel we can do cash out Refi 30 days after closing on the purchase. Shoot me a message if you’d like to chat!