All Forum Posts by: Jeff Dulla

@Byron W. Yes - any time you can go Fannie/Freddie, I would argue it's less costly. Most lenders will follow the income restrictions for Freddie. Some areas are in census tracts that will allow for no income limit. Here is the search tool:

http://www.freddiemac.com/homepossible/eligibility.html

@Byron W. @Chris Mason Thank you for the mention Chris. Byron - no pressure whatsoever but let me know if you would like to chat. You can also PM me if that is easier. I have a decent amount of investors so it is something I deal with regularly. My last connection through BP acquired a four unit in Forest Park using FHA financing, for reference.

@Varun Parkash

1. How did this screw up the income? Because it differs from the tax transcripts? If anything, it sounds like it adds more income and as long as the return is amended, I don't know why that would be an issue. 

2. 4506T - is a tax transcript form that the lender uses to order tax transcripts (a version of your tax returns that comes straight from the IRS). The  use this to match it against the "filed" return your friend gave the lender. 

3. She could be completely in the wrong or maybe she is saying the returns were filed the way the client wanted her to and she doesn't want to lie? Could be a bunch of things. 

4. A lender would never legally ask a borrower to do anything. The bank is the entity extending credit and  as long as they are not discriminating, they are allowed to vet the loan based on credit guidelines. It sounds like to me that if a bank wanted, this would be a viable reason for them to deny the loan if your friend  did not produce the documentation asked for. 

5. He needs to direct the CPA to amend the return and he can pay the increased tax liability. Once the return is amended, filed and proof of receipt from the IRS is received, your friend should be able to close the loan. Regardless of the change in income. 

@Breean Reyes Generally speaking, here is the definition:

A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government and conforms to the loan limits set forth by Freddie Mac and Fannie Mae. You can get a conventional loan at a fixed or adjustable rate.

What type of property is this? Are you trying to hold title in LLC?

@Breean Reyes I could be wrong but it sounds like to me you are being offered portfolio products or commercial products. Not Conventional/Conforming products. 

@Jenna Goldstein I am not trying to debate that it may be cheaper on a monthly basis. However, you are not obligated or bound for a long term. If you cannot aford it, you could end your lease or stop paying. You cannot stop paying your mortgage without serious ramifications.

@Jenna Goldstein To build on what Alex stated but go another route - its to protect you. I saw some of your questions on another thread about jobs. I will spare you the many reasons why a bank has no obligation to lend to everyone and why not everyone should own a home. But I do want to help you understand this rule is to protect you. It would be reckless and completely irresponsible for a lender, honestly, to even lend to you a loan that is 50% of your income. That is typically based on gross income, so before taxes. That doesn't leave one much money to use on other expenses or save. 

I would say it is quite the exact opposite of what you stated above. Lending near 50% debt to income ratio or higher would be absolutely setting you up to fail. The bank is trying to do the opposite. 

@Kevin McDonald Are these potential properties SFH or MFH? Fannie/Freddie will allow you to go to 15% down on a just a normal, conforming loan. There are some other programs out there but they are usually based on median income levels or targeted areas. Of course you can go the route of a Non-Prime loan (higher rates, usually points).

@Nick H. I would love to see some math broken down on here as I see people constantly throwing HELOCs out as the easy solution. Refinance costs are fairly high in MN as title fees and mortgage registration tax is high. However, if you cashout up to 75%/80% loan to value, I would like to know what rates you are being quoted on a HELOC. From what I have seen, you are looking at a rate 2%+ higher than a conforming, fixed rate. If so, you are talking about $1,400 to $1,600 in pure interest cost on an annual basis. That is assuming PRIME doesn't increase from here (which I think is a dumb assumption).

If you went the HELOC route - how long would it take for you to pay it off?

@Brent Coombs how exactly is it that you know that? Do you know Erik? Do you know his finances? Do you know anything about the specific property he is looking at?

FHA carries one of the highest costs of the typical programs offered by residential lenders. PMI lasts 11 years and is purely cost. It also has lower loan limits. In Chicago for instance, in most markets my clients buy in, the FHA loan limit doesn't get you even close to what you need to buy a four unit. Making your answer null and void.

Based on Erik’s question, I thought he was talking Fannie/Freddie because of the down payment amounts - 20% and 3%. Based on that structure, as Wells was telling him, 20% down would be minimum unless you qualify with another program. I was simply commenting on that aspect. 

You also assume that Erik can use this product when he may not be able to. I don't know much but I have done this job long enough to know there is not one "answer" as you so simply state above. The job is to inform as best as possible and allow people to make their own decisions. And i thought the point of this forum was to help inform and do the same. I trying to help shed light on one piece of this. Your simple stance of FHA is the answer is reckless in my opinion and very one sided.

I am sure everyone wants to see us debate all day on here. For Erik - the point is, gather info, know the details and cost for each product, make the best decision for you.