All Forum Posts by: Kyle Johnston

Hi Seth,

Welcome to BP! I'm also new to RE in the Baltimore area. I sent you a connection request, I'd love to talk more about what types of investing you're looking to do and what your goals are.

Hi Rebecca,

I think I saw you post about your first investment a while ago, glad everything's still going well. As far as "traditional" loans, you're not going the be able to get an fha loan on an investment property, so conventional is pretty much your only option. Not knowing anything about your financials, having 4 borrowers isn't in and of itself an issue, it just means there are 4 times the number of documents you'll need to provide. I'd suggest if you can qualify with just one or two of you, then just have your parents give you the money on the side. To your point about having money left for renovations, you can put as little as 5% down on a conventional, but how that's affected by the investment status is decided by the individual lender.

Then you have "investment" loans, which will most likely all require around 20% down, ours requires at least 20% with excellent credit. These will also have higher interest rates, but the trade off is they're much easier to qualify for as you get more properties. This is all pretty general but if you have any specific questions I'd be happy to help!

What's your LTV on your current house? Based on your income, you could carry about $8k in monthly payments before you would no longer be able to qualify for conventional financing. If you can't downsize without having a ridiculous commute, do you have equity available to do a cash-out refi and pay off the other debts to lower your total monthly payments? I'll send you a connection request too.

As far as conventional financing, there isn't any way to get around the at least 6 month seasoning (some require 12 months) that I know of. If I was in your situation, since you say there are repairs to be made anyway, I would say it's not a bad option to get a hard/private money loan to pay off the arrears and do the repairs, then do a cash out refi in 6-12 months to pull your money back out.

Hate to break it to you, but that isn't a bad deal. My par rate for you at 75 LTV would be 7.375, 6.875 with a 1 point buydown. I could get you 6.875 for par on a 5/1 ARM, but if they're giving you that on a 30 year fixed, I'd take it and run (provided there aren't outrageous closing costs/fees that you haven't listed here). Sorry for the bad news but hopefully a second perspective helps a little.

Hi Ivy,

I'd be happy to talk with you about traditional lending! I'll send you a connection request as well.

Hi Colin,

Welcome to BP! As others have said, there are many programs where you can get a very low down payment as an owner occupant, some as low as 0% down in the case of VA and USDA if you (VA) or the property (USDA) can qualify. As far as an investment property (@Amanda Felton this might answer your question too) most traditional lenders will require around 20% down, although, I work for a semi-traditional lender and have options for investment property as low as 15% down. This isn't as good as 0% obviously, but it does get you that much closer and shows that some lenders are a little more flexible, the trick is finding them.

I'd be happy to answer any more questions you have as far a lending requirements. Good luck!

Also @Caleb Heimsoth, 1 point for .125 seems extremely high to me. Again, I have no details, but if I was you I'd at least talk to other lenders before you do anything with them again.

I agree with @Ryan D. and you would have to talk with an actual lender with all your details to get exact numbers. It may or may not be worth $400 to save you $4 a month, but would it be worth $10 to save $4 a month? That's a no brainer, I think what a lot of people don't understand (possibly due to banks not wanting them to) is you don't pay points in 1 point increments. Depending on the case, a .125 reduction can cost less than .1 point and its definitely not linear. .125 can could cost .1 points while .25 costs .5 and .375 cost .6. These are just estimates though so I'd definitely recommend giving someone all your details and getting numbers that are specific to you.

Hi Tyler,

I have this discussion with borrowers all the time, and the answer is...it depends lol. If you plan on holding the property for the long term, I'd say in general, yes, paying some points (to an extent) will have both short and long term benefits. It is technically true that you won't see a mathematical "gain" for several months or even years depending on the situation, but a lower rate will immediately increase your cash flow each month which could be a good benefit. Depending on how much you buy it down, a lower rate can also save you thousands or even tens of thousands of dollars over the life of a 30 year mortgage. Whether or not you think the savings from points is the best use of your money, as opposed to putting that extra money into another investment that could earn you more than you save, will ultimately be the decision you're making. As far as buying down a rate to make a property cash flow, in my opinion would not be a good idea because the deal might not actually be a good one if the margins are that tight, but again that decision will be up to you.

Hope this helps!