All Forum Posts by: Paul Defngin

Quote from @Joe Minteer:

Last year I started my investing and my credit took a 60 point hit and still hasn't fully recovered with one of the credit rating companies. Mine was the same as yours. It's best to look at all of them and see if its across the board. Mine was low with one, but the others were fine. I'm about to see what mine will look like since I'm attempting to increase my HELOC to 150k, using a hard money lender the first time and increasing my Home depot card to cover a new heat pump. I've made 3 inquiries in a week, so I'll let you know where mine ends up.

The home mortgage will not affect your score by that much. 

Biggest impact on credit score is payment history, then utilization or revolving credit, new credit card or department store inquiries, and fall-off of opened but inactive trade lines. 

Quote from @Katie Pellegrin:

Yes I will live in it, rent from myself. Will I still be able to refi when renting from myself?

 If you live in it, you would not be renting from yourself. You would be paying your mortgage, if there is one. If there isn’t one, you would just be mortgage free and just pay for taxes and insurance on the property. 

If the house is a duplex or multi unit, you could rent on of the units and live in one but from your question, I imagined that is not the case but could be wrong. 

Did you the buy the house as your primary home or an investment? If investment, why can’t you rent it to someone else?

Sorry, I’m not really clear on your question. 

Do you have a house that is currently not rented and you want to move and live in it, instead?

@Vincent Russo, like many have said, you can still do conventional financing putting down 15%.  You'll pay private mortgage insurance and the discount points that you'll pay will be more than if you are able to put down 25%. See if your loan officer can put together a side-by-side comparisons between 25% down, 20% down, and 15% down to make an informed decision. Most loan officers have tools at their disposal that can do a Total Analysis for you.  

Also definitely run your cash-flow number. I would err on the cautionary side. 

Quote from @Eliott Elias:

You can only take out a HELOC on a primary residence

This is actually not necessarily true.  There are lenders that can do HELOC on investment properties.  That said, I know that you guys in TX have some pretty strict guidelines for second liens, cash-out, etc. and I am definitely not an expert there. So it may be true in some States but some should be no issue. 

I don't do HELOC's but I do know of some Credit Unions that extend HELOC on investment property.  Due to the nature of the collateral being investment properties, you can expect that things will be pretty vanilla for these type of products. Most will not allow anyone that had any adverse history of Foreclosure, Bankruptcy, Deed-In-Lieu, Short-Sale, and Pre-Foreclosure.  Some will allow property held in LLC if the LLC has 2 years of entity tax returns.And if anyone is looking for HELOC on investment, Federal Credit Unions are who I would recommend that they look into.

Service may not be as expeditious and great but if it solves the solution, why not :-)? 

They are out there.

Enjoy the rest of your Sunday. 

@Jonathan Stevens as the other respondent mentioned; you're best step forward is to speak with a lender. They'll tell you how they'd calculate it. For the most part - the standard is that your lender will use what you claimed on your tax return and calculate your effective income from the tax return, taking in consideration when you purchased it, when you put in service, and how much expenses you claimed. And if you did not put the property in service in 2021 and this year will be the first year that you will claim it on your tax return, then most likely the lender will use the lease amount and discount it for vacancy purposes. For conventional loans, this would be 25% of the monthly lease. That is the amount that most lenders will use. Of course, if you don't have any primary home and this is the only property that you have then it really behooves you to speak with a lender that is familiar with agency guidelines (that is if you are looking for agency loans), as there are guidelines that both GSE's put in place and you want to make sure that you follow that. Of course, if you are looking to DSCR type of loans this may all be different. Hence, the recommendation to seek guidance from your trusted lender.

Good luck. 

Quote from @Dorian Gray:

I’m not 100% sure, it was with chase though 

 Chase would most likely be a conventional financing. If your Schedule E shows repairs that are considered one time or long term capital expenses such as HVAC, Roof, etc, and you can document it with invoices, then you should be able to add them back like depreciation amongst other things. This is where you need to be communicating with a good CPA to properly document your expenses. 

If conventional financing does not work then look into alternative financing. There are loans that will will allow you to purchase an investment property with just using the property market rent to qualify for the mortgage, provided that the rent covers at least the mortgage. That said, they usually have a minimum loan amount of $150,000 and requires at least 20% down payment, for the most part.

Good luck. 

How old is your mother in law? If she's age 62 and she has equity in the home then you and the family - MEMBERS, can discuss about her obtaining a Reverse Mortgage, which may be the solution to her living in her own home without worrying about mortgage payment.  Also, if not possible because she's not at that age, then look into maybe her selling you the home as a non-arm's length purchase - she can gift some of the equity if there is equity as your down payment, and look to a lender that can do business bank statement qualifying, if you are not able to show the income on your tax returns but can verify sufficient business deposits into your bank account(s).  

Good luck. 

@Hao Vu get with @James Wise. He is pretty knowledgeable about that market.

Quote from @Tyler Youtzy:

Hello all, first post.

Im looking to buy a new primary home while I still have another property on the books and not sure how it will be treated in a mortage.

I will explain the best I can and start with some background.

I'm currently deployed, and going through a divorce that should be finalized by the time I'm back home. I'm getting the house in the divorce, but I will have to split the equity. Ultimately I would like to utilize this home to get my foot in the door to real estate investing. Because of the drastic rise in home prices and interest rates, and not knowing exactly what the home will appraise for just yet, I dont know whether or not I will be able to pay the difference in equity out of pocket to my ex, or be forced to sell the property as refinancing out the difference in this market is not fiscally reasonable option for me.

One way or another, I will not be treating that house as a primary residence within the next ~6 months as I'd like to be completely moved out and it will either be utilized as a 1031 or a rental. That being said, as I'm looking for loans for a new home purchase that I intend on moving into. Am I able to get the cheaper rates that go along with primary home loans, as this is my ultimate goal/intention, or will the underwriters push that it needs to be written as an investment property that needs 20% down?

I can afford to pay the 20% on the house, but would much rather utilized the 0/low down payment of a VA loan.

Any advice is appreciated, thank you.

 @Tyler Youtzy, first off, sorry that you are going through this. Second, thank you for your service. Is the house currently an investment property? You mentioned treating it as a 1031 exchange? You can absolutely purchase another primary home using your remaining VA entitlement or 2nd tier and may not need zero down or maybe a down but not necessarily 20% down. It depends on where your existing house is and where you're buying your next home. I recommmend first is arrive at what the ex would want for her share. Then, speak with a lender to go over your specifics on how to pay her out and also goals of owning the next home and if you have any questions feel free to reach out. Hope that helps.