All Forum Posts by: Sasha Mohammed

Respectfully, @Daniel Hennek I do know my guidelines! ;) not only that, but i researched this situation to exhaustion across multiple lenders to see their individual interpretations of said guidelines. On one hand, we have to document a present housing expense in order to use the proposed rents on an inv. property purchase. The issue at hand is not simply documenting on-time payments for current housing. 

For those who do not have written lease agreements, they would find it challenging to use the proposed rents on a inv. prop purchase because they couldn't evidence a present housing expense. Quite a few of the lenders I spoke with about this scenario will not accept per-room rents as "present housing expense" at all without some contractual obligation. Even a VOR would typically indicate the total amount of rents due on the lease, not that individual's portion of the rents paid ONLY. 

While you MIGHT be able to get away with just a VOR or 12 month history of payments from a bank statement, depending on the luck-of-the-draw on underwriter and their interpretation of required documents, you're leaving a lot for gamble and heartache.

Personally, I like to do my purchase PreApprovals in a way that is not left up for chance IF you'll close or not. 100% close ratio doesn't happen by accident :) and the safer bet would be to resolve this hurdle before even shopping for a property. Especially in this market. 

Anyway, the end result here wasn't "you don't qualify"; it was "lets see if we can get your landlord to write your lease at your portion only, and we can skip this headache". But i tottttaly love the challenge, especially on guides. Bring it! ;) 

@Gordon D. are you a veteran by chance? i just locked a vet at 2.75% a couple of days ago. Non-vets are still above 3% but you can always buy it down if you're dead-set you're keeping the loan for a good while. At any rate, call a local mortgage broker and ask for a quick quote. most should be able to provide you some answers without pulling credit or asking for any up-front money. depending on the situation, you should have SOME benefit from a refi if your current rate is 4.5%, just based on where the market is, but there's no way to know for sure without running your specific scenario. mortgage is not a one-size-fits-all.

@Chris Mason i agree with a lot of what you said, except for that yesterday was the bottom. Personally i feel this will continue throughout the year. Fed rate drop was to combat the stock market fallout from coronavirus, and because of heavy pressure from the president... who is in an election year, who's strong economy will help him get re-elected. there is a lot of incentive right now for rates to stay low. just my personal opinion :) we'll see. interesting times, though. 

@Grayson Gist, there sure is! 

The main one is the AMI. Home Possible not only has minimum income requirements to qualify for the loan (with DTI), they also have income CAPS which LIMIT the amount of income you CAN make in order to qualify for the program.

The purpose of this program was to assist underserved areas obtain financing, and in-turn, increase the sales volume in those areas. 

here's a link you can plug in a property address and see what the AMI is -- if it says "No AMI" or "no income limit", then there is NO CAP. Otherwise, it will indicate an income limit which you cannot exceed in order to qualify.

https://sf.freddiemac.com/working-with-us/affordable-lending/home-possible-eligibility-map

disclaimer - fannie mae has a program very similar, which they are making changes to effective July. I'm not sure how long the Freddie Mac (home possible) will be available, typically one follows the other in changes.

Hope this helps, sorry for the length. 

@Jake Beauchamp your age should have zero to do with RE Investing. your experience, however, may play a role in the rates/ terms you qualify for. As will your credit score. 

since you're looking to do investment properties, the biggest hurdle will be coming up with the down payment. investment properties typically require more down. the benefit, however, is that you don't always need to "qualify" for the loan based on your income. Many lenders who specialize in investment-funding will qualify the property itself based on the cash-flow it brings in, as opposed to your personal income and DTI.

What that means is, they look at the rents received on the property up against the cost to own the property (the mortgage debt, the taxes, insurance, maintenance/repairs , etc.) -- if the property cash-flows positive (there is some criteria with this), you should be able to obtain a loan without even providing tax returns and such. 

I will offer a disclaimer: rates and terms will be significantly better if you CAN qualify with income. but it's not mandatory for what you're trying to do. 

Hope this helps!

@Stephen Spain home possible would be the best option IMO for this scenario. 

FHA also has a "self sustainability" guideline on 3 and 4 unit properties -- the rental income from the other units would need to cover the mortgage payment, taxes, insurance, and PMI 100% in order to go. In addition to the non-occupying co-borrower you mentioned above. FHA is simply not a good fit for what you're trying to do.

HP allows for 5% down. The catch with HP is that you need minimum income to qualify for the loan, BUT there are also MAXIMUM income limits to qualify for the home possible low-down program. this is called "AMI". This can be checked by plugging-in the property address to the link below:

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

If you can find a suitable property that does not have an AMI cap (no income limit), you should be good to go with 5% down. 

depends who you ask :) it is tough, though. they use tricky verbiage to stump you, and i recall the answer options being very similar, where two COULD be correct. The kicker is, when you finish the test, they don't give you a score. Just a "pass" or "fail", so you don't know where you need the help. 

I suggest signing up for a crash-course right before the big test. The education material and classes often don't correlate to the test-material, there are a lot of gaps that would in-theory be filled-in by industry experience (catch-22?). 

The crash-course is tailored specifically for the purposes of helping you pass. I'm pretty sure i signed up for one that offered to pay my retest costs if i failed -- I passed on 1st shot. But i do remember feeling wholly unprepared to test that morning. 

They are extremely difficult. I've attempted on a few occasions, ultimately none closed. I avoid these like the plague now, it's just a waste of everyone's time. 

There are lenders out there specifically tailored to rehabbing properties. You'll need a much higher level of liquidity and experience, but they will finance above 100% of the as-is value (something like 80% of the acquisition, and up-to 100% of the rehab budget, but not exceeding 75% of the After-repair-value). 

Rates are higher, too, but the ease of use is a game-changer for more sophisticated investors. No tax returns (in a lot of cases), no income verification -- they're only looking at your experience, your liquidity, and the property (current as-is value, rehab budget, and ARV).

@Grayson Gist - as others have mentioned, it would be smarter to refi out of your VA loan to free up your VA entitlement.

FHA has a "self sustainability" guideline on 3 and 4 unit properties -- this means the property itself needs to generate enough income from of the other 2 or 3 units (other than the one you're living in) to cover the carrying-costs of the property 100% (mtg, taxes, insurance, PMI).

If you're adamant about keeping your VA loan in-place, it may be beneficial to look into Home Possible (for low-down options) instead of FHA -- i think HP is at 5% down on 3 and 4 unit properties.

Your age should have ZERO to do with this, @Christopher Valerio. I'm so sorry that's been your experience so far!

It would make more sense that you're being denied based on length of time as self-employed, income, credit, etc. rather than age alone. I'm making an assumption here (correct me if i'm wrong) -- as a RE agent, you write off most of your income? Therefore when it comes to qualifying for a loan, you don't meet the DTI requirements to qualify?

You may have better luck going with a commercial lender (don't panic, they're rates aren't THAT bad) where they qualify you based off the income generated from the property. You'll have to put a bit more down than you would with consumer financing, but as long as the property cash-flows after all the expenses/ carrying costs, you should qualify, 19 years old or not. 

Wishing you the absolute best of luck! Stoked to see young people in this industry who are hungry and diving in head-first :)

I'm not sure why you've been having so much trouble, @Amy Thatcher. sounds like you've been on title for quite some time, and you've been making the mortgage payments from your account also for quite some time, plus you can document a blood-relationship with the original note-holder... this meets continuity of obligation many times over. 

Traditional lenders should be able to refinance this debt into your name solely, so long as you qualify for the new mortgage with income/ credit requirements. They may  ask you to document 12 month's mortgage payments being paid, and a copy of your father's death cert. 

it sounds to me you've just been running into a few people who don't know what they're doing. this should be a walk in the park!

I'm with @Chris Mason on this one -- let us know when it funds!