All Forum Posts by: Jeff Dulla

@Chris Mason way ahead of me! I am just doing my part to add to the redundant posts and questions here :)

Freddie Mac announced that as of October 29th, changes they have made to the Home Possible program will go into effect. Of these changes, possibly the most beneficial is the change to allow a buyer to utilize Home Possible, regardless of owning other properties. This would allow people to house hack and put a very low down payment on SFH and MFH. See bulletin snippet below directly from Freddie:

Probably the wrong category to post under but wanted to throw out a question. I have a decent amount of investor clients and repeat investor clients. For my owner occupied home buyers, I usually get a gift related to celebrating the excitement of their new home. For investors, I would like to do something different but I am blanking. 

Any ideas for a nice, investor/investment property related gift? Anyone seen anything interesting/cool? Don't know on budget but let's say $100 or less. 

Thanks in advance. 

@Ariel Lisogorsky It can definitely be an issue. Fannie/Freddie, owner occupied loans include an occupancy disclosure that states you will occupy the property within 60 days. The first issue is that you probably cannot comply with that. The second and probably biggest issue with loan approval is that most underwriter's will spot that the property is leased out for another eight months and will stop the loan from going through as an owner occupied loan. 

Many areas have strict tenant rights laws. Not sure about Massachusetts but maybe ask if the seller can send a notification to vacate the property within 60 days. Not sure whatsoever if that is something that can be done but maybe worth asking. 

@Michael Batshon Conventional will be 25% down. You can find some portfolio or Non-QM loans that will go lower. Rates will be significantly higher, short term, ARM based.

@Michael Batshon a single family home or a MFH? If single family, you can put down as little as 15% with a Fannie/Freddie loan. 

@Gerardo Lewis You can definitely refinance out into a conventional loan, assuming you meet the requirements (5% equity or more, solid credit score, etc). You can use another FHA loan at that point but it still has to make sense from an underwriting standpoint or else you may be in for an uphill battle. Regardless of what loan type - FHA, VA, conforming, jumbo, all underwriters look at the other home you have and whether or not it was owner occupied. If it is owner occupied and you are converting it and trying to buy another owner occupied, they want it to make sense - meaning it is closer to work, larger, etc.

@Ryan Moore Speaking purely from a conforming loan perspective, it is definitely doable. Most investment purchase appraisals include a rent schedule. This is a fair market analysis of what the going rent will be for the property. To be conservative, if you take this gross rent number and reduce it by 25%, as long as whatever is left over covers your PITI(A and PMI if applicable) payments, then the hit to your DTI would be zero.

@Mike Troyke I guess I would phrase it not as you are "getting points", but you are paying points. That is exactly what you are doing. One point being 1% of the loan amount. This is not you paying interest - it is simply, straight up, a fee that you are paying for the lender to give you a lower interest rate. 

Basically, banks determine what the lowest rate they are able to offer without points. In order to drop the rate lower, you pay X amount in points. 

Often it does not make sense. A lender should help you do a break-even analysis. 30 Year Fixed pricing doesn't usually lend itself to a solid break-even on paying points, unless you will hold the mortgage for a very long time - 15 years or longer. But sometimes the break-even on a point scenario works out. ARMs can present smaller gaps between each .125% of interest rate, compared to a 30 Year Fixed. Let's say you wanted to do a 7/1 ARM and pay 1 point. Let's say your rate will dip by .50%, your monthly savings is $150/month, and the total cost in points was $4,000, you would take the $4,000 in points, divided by $150 in monthly savings, that gives you a 26 month break-even. If you happened to stay in the property for the full amount of fixed ARM years (7 years), your savings over the seven years is roughly $8,700.

That is a very simplistic view of the analysis that should be done. You could also take into account time value of money to really determine whether or not it was worth it. I would agree for the vast majority of clients, paying points does not make sense. 

@Elliot Cash Yes. Any properties with financing would count against the max amount of financed properties. When you cash out, you are taking out a new, conforming loan on the property. This would definitely count towards the limit.