All Forum Posts by: Jeff Dulla

@Andy Wayne Like a lot of posts here - you can't paint all scenarios with a single brush. Much of the decision you make is going to be based off your personality, your philosophy and what makes you feel comfortable. 

If you just break it down to the numbers, the answer would be based on what other plans you have and what options you have to finance. If your home is sub 4.00%, that is a low cost debt. If you look to acquire more properties at 5%+ - you just traded off a much lower priced debt for a higher one. Which may have not been the best move.

But ultimately, at the end of the day, you need to feel comfortable. 

@Sean Durham

@Michael Healy That product just sounds like an ARM - period. That is the typical function of an ARM - fixed for set period and then starts adjusting.

The portfolio aspect may allow you to go higher than the 30 Year Fixed based on set loan to values. Is the portfolio product to 80%? The 30 Year Fixed does sound high for an investment property, the 10/1 ARM sounds pretty damn low.

@Sheena Varghese I admittedly did not listen to the podcast but by definition - that is not delayed financing. Delayed financing is when you buy a property in cash and can cash out refinance within the first six months of owning the property.

What I believe you are looking for is a bridge loan - which in many ways does not exist the way it used to. I do know of a couple of bridge loan options for you. They will allow you to take out a second loan on your current property, subordinate to the first mortgage, to use for down payment on the new home. The hope would be that lien gets paid off as soon as you sell your current home. Does that make sense?

Feel free to PM me for more info on the bridge loan. 

@Jen Ruffner In my opinion, they are all kind of rough. The process always seems more difficult than it should be. Appraisals are often an issue. 

As much as I have not loved facilitating the process through them - Huntington Bank (bought out First Merit). They have some of the lowest rates - which is even more important and we start to see more signs of an increased interest rate environment. 

@Shantelle Evans Coming from a fellow lender - they are one of the largest mortgage companies in the US, rival retail banks in size and trust - so I am sure tons of people have used them and they are OK enough at it.

They are large and typically more costly to use. I dont think it’s a mystery at all that their rates are higher - just take a couple minutes to compare. I am sure they do a fine enough job but I would debate the service and reliability you receive.

I would try to find a local mortgage banker (banker, not a broker) that has a solid reputation and is reliable.

@Megan S. It is much easier to get another FHA loan if the you do not still have an FHA loan. So yes, that is why you see people refinance out.

There are some reasons you can get another FHA loan - if you can prove major life changes. An example would be a job change that is far from your current job location or if you can prove your family is growing (maybe marriage certificate or birth certificate of a child). But obviously the rules are built to try and stop you from doing exactly what you are thinking so the easiest is to refinance the first FHA loan out to a conforming loan.

@Alyssa Paros Almost any lender can do this for you. There are a few different ways to accomplish this. Private Mortgage Insurance is simply an insurance company insuring a portion of the mortgage. These companies are willing to get rid of the monthly payments for you - by being paid off up front. 

The two main options for doing so are called borrower paid single premium mortgage insurance and lender paid single premium. 

Borrower paid single premium is when the insurance company charges a lump sum at closing, rater than monthly fees that last until you hit 20% equity by amortization. The amount of the buyout can range depending on your credit score and how much you are putting down (and a few other items). With borrower paid, the lump sum is going to be charged at closing and paid for by either the borrower, a credit from the seller or a lender credit. 

Lender paid single premium typically means that the lender is bumping up the interest rate, above market rate, and paying off the lump sum charge from the insurance company in that manner. This is the option you commonly see advertised as 10% down with NO PMI!!! A smart marketing gimmick but best believe that you are paying the PMI off somehow (in this case via a higher interest rate)

I am not saying that PMI buyouts are bad, in anyway. I have done plenty of them. But the numbers need to be analyzed on a case by case basis and a PMI buyout doesn't make sense for everyone. Make sure your lender can explain all of this to you.

@Dooreuhn Cee I am not an attorney or qualified to answer from a legal standpoint. But speaking from what I have seen, obviously this structure is ridiculously common. The answer is different depending from what standpoint you are asking. 

Lots of places have an illegal basement and what makes them illegal is that they do not meet code for someone to live in them. However, if they are being used for storage or something like that, it is a non-issue. If you want someone to put a bed down there and live, then regardless of whether or not it is a completely separate unit, for separate renters, you have to bring the unit up to code (and meet the zoning requirement). Typically the unit lacks two egresses or something like that. If you are just renting it to them as extra square footage and storage, I don't believe you have to address that issue. 

If you are going to try to get a loan for the property, you have that issue as well, but more than likely will not be able to obtain a loan unless the legal requirement is fulfilled. You can have what is called a Legal Non-Conforming property, which means it is legal but zoning is out of code (in Chicago, many areas have been rezoned R-1 SFH yet can still be a multi family property). For the most part, you can get financing for that. If you have an Conforming property that is illegal - you are more than likely going to have a problem and need to do exactly what you proposed above in order to get financing.

@Sarah Bojorquez I think there is not a simple answer to that question. It depends on how much time you have to devote to this. If this is your full time job or you are trying to make it your full time job, I think it is certainly worth it to get your license. Obviously you will save yourself a lot of money and from handling that aspect of the process, you will continue to become better at it. 

If you are like me or many people investing on here, you have a full time job that you are devoting the vast majority of your time to. And if you are looking for valuable properties, how can you possibly can any advantage when there are people doing this full time, 100% of the time? You need partners you trust. People that know the area, know what they are doing, know what you are trying to accomplish, etc. Sure you will be giving up a bit of money but ideally, the value they are providing is still such a solid value, the added costs are well worth it.

Just my two cents but you it comes down to how much time you are devoting to investing.