All Forum Posts by: Jason Wray

Sawyer,

Ask your parents or a family member to help buy you your first home.  They can add you to title and in 2 years you can refinance the home into your name, take out some cash and buy an investment home.

Jonathan,

Your lender dropped the ball!  Unless there was a CIC change in circumstance or change of loan program your bank/lender should of had you locked in at that rate.  You like a lot people are facing the reality that there are a lot of loan officers out there that fail to lock their loans because they wait for their processor or team to lock their loans.

This happens to loan officers who are not paying attention to their files or just pure ignorance that fail to lock in the rate on time.  I would reach out to their branch manager or corporate office and send any emails you have showing rates promised and as disclosed.  See if they will honor the rate or pay for the rate buy down.

John,

What exactly are you looking for because UW guide lines for multi-family vary depending on variables.

Primary home, Investment, Loan size, Number of units, FHA or VA for primary, Conv or Non/Qm for investment.

The list can become extensive if certain variables are added like closing in an LLC, or Trust, Co-Borrowers, Gift funds etc.

An LLC is really to help protect you and your assets in case of a accident or the liability of injury occured on or in your rental. You can form an LLC but you can also form an agreement or have a contract that outlines the ownership and the equity. From a Tax standpoint you can both file a schedule E with ownership percentages.

You can buy the rate down using your own money or see if the seller will offer a seller contribution.  That will allows you to buy the rate down into a lower rate low 5's or High 4's.  Keep in mind a refinance is "Not" always an option.  Sometimes it takes awhile for a home to grow enough in equity to be able to refinance.  You also have to consider this inflated market that in many ares is getting ready to adjust down.

Rates will more than likely balance out in or around 2024 but the lieklihood of 2% and 3% will be a thing of the past for awhile.  Do you have any other banks or lenders offering you a second quote?  Are you comparing rates and are you paying points and what are the hard costs/origination fee's?  That is also important and you have 30 days so get a second opinion and quote!

Jake,

It is very liekly that he signed a "Non-Assumable" addendum with his FHA lender. This is "Very" common with FHA loans with very few exceptions. UNlike VA loans FHA has an addendum that requires the borrower sign to acknowledge the loan cannot be assumed. You can always do a "Subject to" contract but that may cause an issue with your friends FHA lender/contract.

You could have your friend refinance the loan into a conventional loan and add you to title and after 6 months you could refinance it into your name. If your friend moves out of the FHA property it will make it harder for him to use FHA again. Rule of thuumb is you buy a home using FHA and refinance before you move out because it causes your refinance rate to be higher due to a non-occupied property aka investment.

Hi Jessie,

Yes, thousands of investors and New home owners are buying every day.  Even with recently inflated rates investors still see the long term gains with future equity and passive income.  Not to mention a great tax benefit for deductions!  There are some things you can do to help with these higher rates to save.

You can elect to do a rate buy down which can help get the rate back down closer to where they were last year. Normally it would be tough to ask but in some areas where the seller is a little more desperate you can ask for seller contribution/seller credit towards closing costs. That can be used to buy down the rate for a lower payment. On an investment you can only ask for 2% but on a primary you can get up to 6% which has been tough due to market. Prior to COVID I was seeing 3-5% normally on most VA, FHA, and some conventional loans.

You can use your own money and equity as well you do not need to have a seller credit.  Basically use a burn rate to see if it makes sense!

Benjamin,

Why not do a cash out refinance so that you can take out the cash and keep your rentals fro the income and long term benefits.  

John,

All good questions and although it's a different answer for each individual. I think if you look at from a money savings angle I would say buy a primary. Reasons are you can do both live in a unit and rent out the other units. Buying a multi-family and using a VA loan for example will allow you to save money on the down payment.

You can also apply this to a SFR - single family home and in just 6 months transition it into a LTR - long term rental. You can also earn income having a roomate who helps pay the bills/mortgage. Either way buying a primary first allows you to break into the home onwership with no down payment. To answer your question Yes, buying a rental does effect your ability to buy a primary due to debt to income ratios.

If you buy a rental you would have to wait 12 months to file your tax retunrns and show the rental income as a profit.  You cannot use the income until you file your tax returns so before the 12 month mark it would be a negative as a debt with no income.  So unless your income can afford both mortgages rental and primary it would be a waiting game of 12 months.

Keep in mind the best way to use the VA loan is to buy a primary and in as little as (6) months of title seasoning you can refinance into a conventional loan. That will allow you to use the VA loan once again to buy a primary. Never move out of the VA primary until you have refinanced because rates on an investment property are higher than primary refinance.

Abe,

First congrats on making the move into the REI world. I have to ask if your going FHA why 10% down since FHA only requires 3.5% down? If I was you I would get another quote and see if you can save some money and possibly even a lower rate.

Feel free to send me an email or PM me with any questions.