All Forum Posts by: Lynne Smith

@Robert Williams with your credit score and location, I would highly suggest you look into a multi family home with a USDA loan. you can get 100% financing no money down. And then you can live in one side of the property and rent out the other side. If you Google usda map you'll find a link that shows you where USDA is allowed. If your credit score is over 640 you're highly likely to be approved. There IS a limit on household allowable income so anyone who lives in the house, over 18 years old, will have income limits. I can't recall for sure but I think it's about 90k for 1-4 people combined in same house hold.

Cons : The down side to this scenario 1) you'll live next to your tenant (this can be a pro as well though because they can't hide from you and will be more likely to pay on time when you live right next to them), 2) multi can be harder to sell when you want to exit the property later on. My family has often found the best buyer later on is an existing tenant.

Make sure before you buy.this type of property that tenants are current on the rent and ask for a rent roll from existing owner to verify this. It's just a paper that lists the payments each tenant made but it keeps the owner honest as they know you are relying on that in making the purchase and will have a lawsuit against them if they lie.

@Shivam Patel wow. As a mortgage underwriter I'm happy to hear your loan officer is so knowledgeable. So what exactly are you trying to accomplish? You're in a primary home with an FHA mortgage right now? And you want to buy an investment property? You CAN use rental income from an investment property being purchased to reduce your debt to income ratio..if the property already has a tenant you can use the existing lease. So the bigger issue is usually whether you have a down payment. If you own your current home, do you have equity in the home? Maybe you can get a heloc?

@John Morgan I'm a mortgage underwriter. You will absolutely need to disclose that it's an investment property..it affects your rate, your Max LTV and your Max DTI. The application asks where you live currently, whether you own or rent, what the subject property address is and what the property intended use will be. Occupancy type is a big deal and trying to hide that it's an investment property will not go well. At best the lender will just refuse to make the loan. At worst we report it as attempted mortgage fraud. (It's not worth it.) The most common way to buy an investment property with a low rate is to either get a conventional mortgage (fannie / freddie) or if you have equity in your home you can take out a heloc on your home and use that to pay for the investment property. Often times people do a combo. The rates are so low right now that getting a conventional fixed mortgage on an investment property is probably the best way to go. That way it is fixed and not variable.

@Montez Blackburn it means loan to value ratio . Loan Amount / Appraisal Value = LTV. To avoid mortgage insurance you need 80% or lower. So for example : 80k loan on a property that appraised for 100k. When you first apply you'll estimate what you think your home is worth and that will be your initial estimated LTV but once your appraisal is completed the true LTV will be calculated. This is usually okay but occasionally when people are cutting it really close they run into issues and then either have to get mortgage insurance or put more money down. For ex in my earlier scenario let's say the house appraisal came back at 98k. The borrower would need to keep the loan amount to no more than 0.80*98,000= 78,400.

Using all fha mortgages means you aren't putting hardly any money into the deal and with prices rising you could be under water in the future. Not a good idea. If you refi to a conventional mortgage the down side is repetitive closing costs, and PMI can be higher than you think especially if you're at 95 LTV. if you already own a primary home fha, I would just save up until you have enough to put down on a conventional mortgage investment property loan. Prices are very high right now, so I would wait and save up for now. Refi your fha mortgage to a conventional mortgage ONLY if you're LTV will be 80% or less, so that you completely eliminate mortgage insurance. Once you have at least 20% equity in your personal home AND at least 4 months emergency savings, THEN look into an investment property. Until then focus on saving up. You can house hack your existing primary residence with airbnb or rent a room to someone..and then use that money to make additional payment to principal on your existing mortgage.

Agree. I don't buy it. She's working the system. Sad. I'm very lucky my tenants didn't do that. Really makes me thankful. 

@Adriana Arnold I'm in NJ which is also very tenant friendly. My state has a moratorium in effect through June currently though it will probably be extended again..my father had tenants that hadn't paid rent in over a year by the time he got them evicted. Here's what he did - pulled a background check on the primary occupants that are named on the lease. Fortunately they had criminal histories and he was able to get the judge to evict based on that. (Stabbed a family member in the apartment). Any chance your property is near a school? If so be sure to mention this. My father had neighbors tell him that they saw needless on the ground. He included that in his complaint. Reiterate that you aren't seeking eviction for non payment, rather it is for lease violations. Argue that 1) tenant depositing money directly did not waive any eviction rights by landlord as tenant deposited to the account, not the landlord ; 2) even the court disagrees, the action is for lease violations - not a non payment of rent eviction - so this is a moot point. Your argument is simply nothing involving rent money.

I just spoke to my own attorney a few days ago and he said he recently got a tenant evicted despite the moratorium AND the tenant was current on rent. But tenant was not allowing access to the property. He filed an "emergent court" request because the tenant would not allow access to the property and that is a lease violation itself. Tack on every damn lease

eviction you can think of. Too many occupants, illegal activities, threats against landlord and tenant repeatedly refusing access to the property. (Tell them you want to come this week to inspect the property and if they refuse you have another attempt documented!)

@Armand P. My uncle lives in Hawaii and has a few rental properties. Be very careful to check out airBNB rules in the town. My uncle went from airBNB to zilch overnight because residents didn't want homes used for this purpose. Might be less of a problem in towns that aren't the most heavily visited. There was push back from landlords and the latest news is that his town is giving out a limited number of vouchers on a lottery system each year and only those recipients can airBNB. He's in Oahu. Google : Bill 89, also known as Ordinance 19-18.

@Tamar Hermes I only have 1 rental but they paid on May 4th. Yahoo. I'll take it. I am definitely the most open minded I've ever been on getting section 8 next

@Jelani Fearon until a few years ago you had to put down 5% on a conventional. But more recently they made an exception to accept 3% down for first time home owners. Most lenders have a product for this. I work for WF and we offer that (but I'm not in sales so don't worry I'm not trying to get a commission lol.) Here's a link to the wells product page : https://www.wellsfargo.com/mortgage/loan-programs/your-first-mortgage/

The 20% down rule is just to avoid mortgage insurance, but yes you can do a conventional with only 3% down. You will still pay mortgage insurance but once you pay down your loan to 80% LTV you can drop the mortgage insurance. Whereas in FHA, u

You pay mortgage insurance for the life of the loan. That's why a lot of people with FHA mortgages refinance to a conventional loan as soon as they can.

You might be required to complete home buyer counseling. You can do it online. It's usually like $100 and takes 2 hours. Totally worth it if it means you can get conventional financing in my opinion. If you already have a loan officer you can just ask them if they have a similar program. Doing a lot of rate quotes can hurt your credit score so don't go crazy comparing loan quotes. In the end they usually aren't much different from one place to the next honestly.