All Forum Posts by: Jesse Hinaman

Hi Perry Arnold I am a flipper, former construction project manager, and a full time mortgage lender. In addition, my fiancé is a top performing real estate agent in the Sacramento, Placer, El Dorado Hills area. I have plenty of contractor contacts and a firm understanding of the home construction process. Would love to connect and provide value for you. Feel free to message me.

I'm curious to know what's the quickest close that BP members have experienced for a standard financed deal (could be investment, primary home, vacation home, etc.)? Do other states have different standards? For example, in California typical financed deal has 30 day escrow. I recently closed a 5% conventional purchase in 18 days (so it is possible to do in a lot less time than 30 days). In California we use title/escrow officers in lieu of closing RE attorneys. Does this make a difference in closing time-frames?

Private lenders write their own rules so not interested in hearing those timeframes. 

What I'm curious to hear comparisons on is anyone who's gone through the pleasure of using conventional/conforming financing. This can be Conventional, FHA, VA, and even USDA loan.

In case BP members aren't aware, the Federal Housing and Finance Agency (FHFA) increased the conforming loan limit nationally for Jan 1, 2017. First time they have increased limits since 2006. In high cost areas like Southern California, Bay Area, and many parts of surrounding Sacramento / El Dorado / Placer area this is huge news. Price points that once required applying for a JUMBO loan (JUMBO typically has higher rates and much stricter qualification requirements), can now use FHA or Conventional conforming financing to purchase.

Check out your State and County limits here:

Conforming Loan Limits by State and County

Other big news, FHA just announced today a reduction in the Mortage Insurance premium that goes into effect on January 27th. This is great news for new investors (or old) looking to purchase a primary residence or 2-4 unit multi-family and living in one unit.

@Terron Winn there are a few items that I'd like to debunk based off the back-and-forth dialogue, and provide my input. 

First of all, you can rent out a property with an FHA mortgage. When you apply for an FHA mortgage, it must be your primary; however, circumstances in life can change and you are able to rent the property without having to refinance. Typical FHA stipulations require you to live in the property for 12 months. The other thing you need to keep in mind is you can only have ONE FHA mortgage at any given time. This means, you couldn't apply for another FHA mortgage while you still had the existing mortgage on your first home.

Second, FHA loans in 2011 required MIP for 5 yrs (it's referred to as Mortgage Insurance Premium for FHA loans, and conventional loans use PMI, Private Mortgage Insurance). You cannot drop that insurance within that 5 yr period. FHA loans originated after June 3, 2013 had to pay MIP for the life of the loan if putting less than 10% down. If putting 10% or more down, MIP would be for 11 yrs.

Third, the consideration of rental income in your Debt-to-Income (DTI). This can be a little tricky if you don't have prior landlord experience. You definitely want to consider pro's and con's of each scenario before making any financial moves (ie. refinancing). It's a catch 22 because you want to pull cash out of your current equity; however, this can raise your DTI to the point where you couldn't qualify for the Investment loan or new home loan. This is where a detailed analysis of your financials is required to determine your options. Conventional loans only allow a max DTI of 45%. This means all your debts (housing, credit cards, car payments, student loans, child/spousal support, etc.) divided by your gross monthly pay (your wages/other income before taxes and deductions) cannot be greater than 45%. FHA allows up to 55%. Some HELOCs (home equity line of credit) allow up to 50%.

Fourth, Cash-out refi is limited to 80% Loan-to-Value (LTV) on primary homes and 75% on investment properties. Someone above mentioned only 75%, and that is typically the case with conventional/conforming loans for single family investment properties. If you refi while it's your primary then you can pull up to 80% LTV; however, most lenders have a document you sign stating you will live in the property for at least 12 months so you will run into issues if looking to purchase a new primary home after you recently refi'd your current home as a primary.

I have been in this situation many times, and have been able to successfully navigate all the guidelines and rules. Keep in mind, these rules change almost weekly. In this market, it's typically changing for the better (except FHA and primary conversion rule change in 2015).

Shoot me a message if you want to talk further and determine implications of one choice compared to the other. There is a lot more information needed to ensure you make the right decision.

@Jeff Frankenfield There is no loan limit with VA. Depends where you live, but for my California county, Anything above $475k ($474,950 to be exact) is considered "Jumbo VA". You still get 0% down up to the county limit with the VA guarantee, and would need to put down $0.25 for every dollar above that.

For example, if you bought a home in my county for $600k, the first $475k will require 0% down. The remaining $125k would require 25% down ($31,250). That's only a little over 5% down on a $600k purchase, which is much less than a typical jumbo loan. Add to that the fact that VA has no mortgage insurance and rates on a 30 yr fixed are currently in the low 3's gives you an incredible opportunity.

I highly doubt an underwriter would approve a VA loan for a part time residence in Texas, while your family is in California.

If you want more info on your VA options. Shoot me a message.

Chet Mazur I have a local commercial appraiser in the Sacramento area that I'm good friends with. Shoot me a message and I'll give you his contact info.

Elliott Elkhoury this is awesome! Very detailed. Great information. Thank you for putting in the time and sharing.

@Tea Houck there are two questions within your question.

How you hold title and who's on the mortgage are two seperate things. 

As @Simon Shih mentions, if one of you qualifies for the loan on your own, it would only be detrimental to your future financing opportunities to have both of you on the mortgage. The full amount of the loan will show up on both of your credit reports; but if only one of you is on the mortgage, then it will only effect that persons Debt to Income (DTI). The other person who is not on the mortgage, could go and apply for another loan on there own and would not take the Debt hit of a mortgage.

If you're concerned about both being on title, you can quitclaim 50% of the property ownership to the other person after the deed of trust and grant deed is recorded. Could literally be done the same day.

My partner and I recently picked up a great flip property in one of the most desirable neighborhoods in Sacramento (Land Park). Before purchasing the property, my biggest concern was the pool that was de-plastering and chipping away in chunks. I knew this was going to be a big ticket item and set aside a large budget number for it.

To make things worse, I began watching videos on YouTube that compiles the entire process of demoing and re-plastering a pool. After watching these 5 man crews working for what seemed to be over a week straight, I thought to myself this could potentially be a 5 figure ($$,$$$) repair cost.

My partner called out all the local re-plastering companies and got three separate bids. Now before I go into the actual numbers, I want to provide a disclaimer to anyone who pulled this post up from a specific search regarding pool replastering, that we quoted the pool work during the dead of winter when these contractors were hungry for work...I get the feeling that we got competitive numbers that were probably 30% lower than peek season pricing.

With that said, the cost to do a deep clean and freshen up of the pool deck, re-grout all the pool deck joints, repair some tile work, new pool light, demo and re-plaster the entire pool, plus some bonus inlay tiles in all the steps cost us $4,750. The work itself took 4 days, and the upgrade was well worth the money. Pools are very highly desired in the hot Sacramento summer climate, and pools in this historic neighborhood are hard to come by and make that much more unique. Definitely a nice selling feature in our soon to be listed property! Take a look for yourself below...

I would like to hear other investors experience with in-ground pool repairs. Any comparisons good or bad. As investors, the better we can understand the numbers behind these not so common rehab items, the better equipped we can be when negotiating the work.

More updates on this project to come ;)

Count me in!

@Joe Bertolino clear your schedule.