All Forum Posts by: Sam Abazari

Nathan, these are fantastic questions! I am a conventional lender and this what a lot of my clients do.  I will attempt to answer all your questions in order and if I miss something, please feel free to reach out to me directly!

Q: How do banks appraise a newly rehabbed 2-4 flat?  Are they appraising it and providing refinancing based on the stabilizedNOI or since these types of apartments don't require commercial financing, are banks/lenders solely appraising a property based on recent sales comps in the area?

A: It is a market value appraisal based on comparable sales to find the value of the property and a rental appraisal of market rents to find the rental value of the units to establish the income of the property (which is very important if you need the property income to qualify)

Q: How do nonconforming units impact future appraisal and refinancing after the apartment is stabilized. Does the bank not care whether one of the units is nonconforming and do they only look at the NOI, or is the nonconforming unit taken into account?

A: If by non-conforming do you mean illegal units, for example a legal 2 unit building with 4 rental units, then yes the banks care and they might even ask you to remove anything that is illegally there (stoves, gas lines that are hooked up to furniture and appliances, etc) and they will not use the rental income of the illegal units in the appraisal.  That being said, Cook County is famous for having illegal 3-4 unit buildings and since they have changed owners a lot, sometimes not even the owners know of the actual zoning of their building.  In these scenarios, it's a dice roll if the appraiser or anyone else catches the illegal units or not. 

It's not uncommon for legal 2 flats  be bought and refinanced as 4 units just to later find out the actual zoning of the building.

Bonus Question: How do I ensure the appraisal value comes where I need it to?

A: First you need to do great homework upfront to understand the market value of the property. Second if you are doing extensive rehab, document everything!!! Take before and after pictures and really focus on value add items that will bring the appraisal up (extra bedrooms and bathroom and renovations, etc)

I hope this helps and let me know if you have any other questions!

Hey Jason, let me know if you ever have any questions mortgages and the lending process. Happy to help and answer any questions :)

Hi Kirsten, 

you can have multiple pulls within a 45 day time frame without any effect on your credit score. Hope that helps.

Hi David, as a lender I would agree with Tchaka. However, rates don't tend to vary that much from company to company and often mean very little in the monthly payment. Look for other considerations like origination costs.  But looking even deeper, depending on your situation you might need a lender who can simply do a deal than look for best rates.

I hope that helps.

Hi Christina, I work for Summit Funding which is based in Sacramento.  Great company and really focus on customer experience, I am happy to talk to you further on it.  Feel free to DM.  Best,

Sam

Hi Ayana, below are the answers to your question:

- Is it better to go through a mortgage broker or to call around/use bankrate.com to individually reach out to lenders?

I'm biased to this because I'm a lender myself so I will say better to contact a loan officer because the service you will get will most likely be a lot better and more importantly faster (rates are going up like crazy specially in the past few days).  Big banks and online lenders will probably offer a slight discount on your rate though

- When bankrate lists "zero upfront fees" what does that mean? Are there still other closing costs to estimate with a refi? How do I calculate those extra costs?

The only up front fees are condo questionnaire fees and appraisal fees - I will guess your condo won't need an appraisal if you are doing rate/term refinance  given your loan amount to the value of the property.  Both the appraisal and questionnare shouldn't be over $800 

- Anything else I should know or look out for in this process?

Are you a co-op or a condo? co-ops will be tougher to refinance and maybe even a little more expensive 

I believe that there are many factors that you are considering as you say it might be time to buy outside of IL or even U.S but the post sounds like the taxes are the main reason.  If taxes are the main reason then it's important to think how much impact they really have on the investment, i don't believe the taxes really should sway you that much and here's why:

1. They are a small cost to the overall investment
2. They're already factored into the price of your asset when you buy (this is one of the main reasons why Chicago and IL has remained so affordable despite its large size and all that it offers)

Thoughts?

Hi Carissa, I have seen it done with a lot success specially around traveling nurses and doctors - the trick with is that you kind have to put on your salesperson hat and connect with HR and agent professionals that help them with housing.  It is very profitable and safe if you're willing to put in the time

Hi Vinod, your income will not affect your interest rate but it will affect your eligibility and purchasing power (what price you can buy).  This is specially important if you go from base salary to commission or bonus structure

Hi Ang, that is totally ok.  In fact are you are eligible for another primary home loan because you are moving.  I'm a loan officer here in IL, DM if you have any other questions. Happy to help.