All Forum Posts by: Sasha Mohammed

yep! totally within the rules to rent it out after the first year of living in it. I, too, rent mine while living in it as a house hack. Guidelines are still met because it is my primary, I do live here. 

After the first year, you are eligible to purchase a new primary with that same 5% down if you'd qualify. there is a guideline referred to as "departing residence" which will allow you to use 75% of the lease on your now-primary-turned-rental, for the purpose of offsetting your existing payment on the house your'e exiting. this should help with the DTI on your next purchase, but beware, you won't get credit for positive rental income -- only offset the existing payment.

this is a really cool strategy to get multiple investment properties under your belt for low down payments.... IF you can stomach moving every year!

Sorry to hear about your GMa's passing! :( 

There are options, even for self employed. i have a lender, for example, which will use 100% of your 1099 income to qualify you, as opposed to your tax returns (fannie and freddie) with all of your write-offs. 

You could also look into bank statement loans, which use your deposits to qualify you instead of your tax returns. 

If you don't intend to live there, you could also try to finance using some type of DSCR loan, which would be based off the tenants paying rent as opposed to you as a borrower.

i suggest you reach out to a mortgage broker (broker specifically, as they should have lending OPTIONS for you) to take a look at your entire financial picture and tell you what would be your best solution. 

Best of luck! 

both answers above are correct, it depends on the loan program and lender you go with. 

Conventional loan cash-out seasoning just moved to 12 months if the loan you are paying off to refi (existing) was originated after i think March 7th was the date. if it was originated before then, you can still do a cash-out refi on a conventional loan after 6 months. 

As @Ash Hegde mentioned above, there are lenders that can do as little as 3-months cash-out seasoning, but it would be a different loan type altogether. DSCR looks at the property as a business and whether or not that "business" is profitable. This differs from fannie/ freddie who look at YOU as a "borrower" and your ability to repay (ATR) on that loan.

pros and cons to both. if the goal is cash-out as quickly as you can, DSCR or some other type of Non-QM loan would be your best bet

if paying off the tax liability in-full is not an option, i would look at setting up a payment plan, and then seeing what other items can be adjusted to make room in your DTI for the monthly tax liability.

If your tax liability adds $278/mo and you only have room for +$79/mo, then we need to shave off $200/mo in other items. 

Since this is FHA, ask about single-premium Mortgage insurance.

maybe look for a cheaper homeowners insurance premium (increase the deductable for now, or reduce coverages in allowance with lender guidelines). 

also take a look - you might have a debt that is half the balance of the tax liability, but paying that off would free up a TON of wiggle room on DTI.

lastly, ask about buying down the rate. dollar-for-dollar, typically a rate buydown will do more to improve your DTI than putting those same dollars into your down payment.

GL!

Commercial loans will let you close in the name of an LLC. There are lenders out there that will let you do a DSCR cash-out loan with 3 months seasoning and use appraised value for your transaction. Many of these loans won't report to your personal credit anyway, BUT...

You, or another partner, would be a guarantor. This means if you default, they can come after you personally IF and only IF the collateralized property is not enough to satisfy the obligation. 

You can ask about non-recourse options, but to be frank, those are few and far between right now. Non recourse means they are limited to the collateral itself and that's all they can come after in the event of default. 

if you're going conventional, 6 month cash-out seasoning to use new value plus have your loan amount exceed purchase price plus closing costs. 

you can do delayed financing within the 6 months, and use new appraised value, but your loan size would be capped to the $90k plus fees you paid during that transaction. 

alternatively, there are DSCR lenders that would let you do 3 month seasoning, we'd just have to document the renovations you've done in that time.

Still doing cash-out refi's, still doing refi's. everyone's goals are different, and seasoned investors are not new to rates where they are currently. leverages are definitely lower, as you mentioned -- deals dont pencil out as well at 75% LTV anymore, and in a lot of cases even 70% is a tight fit. but it really just depends on what your plans are for that money and your specific goals for your portfolio. there's no one size fits all here.

as for HELOCs, ive never really been a fan simply due to the instability of the rate and payments. there is a use case for it, but in this volatile market, with the fed still raising rates (and helocs being directly effected by fed rate hikes) im even less likely to recommend them. again, its a good fit for some, and if it makes sense for you, there's nothing wrong with that. 

your best bet IMO at this point is to see about private money. IE: friend or family member that might be willing to loan you the cash. 90% LTV/ LTC is on the higher end, and really only happens in a few cases: owner occupied, or rehab lending (non owner occ). you could try to refi it now into a rehab loan, but chances are there wouldn't be much you can squeeze out of it. And as @Albert Bui mentioned, new lender would likely heavily scrutinize your intentions as the original note would indicate you intend/ intended to live there. You'd really have to prove to them that you didn't move in, and why you initially told the first lender you planned to (this could be considered occupancy fraud). Tread lightly, or look for outside monies. 

Guide on departing residence is dependent on the loan-type on your new purchase:

If your new loan is Fannie, you can use 75% of the lease on departing residence to offset existing PITIA , no appraisal required. 

If your new loan is Freddie, its lesser of the two: 75% of the lease or the 1007/1025 (appraisal required) to offset existing PITIA. 

Different answers due to differing guidelines between GSEs. Stay away from FHA on this one, much more headache than either of the above :)

you can try to squeeze into conventional 3% down, and then do LPMI instead of BPMI. the rate will jack up probably reeeeeally high, but it will FEEL like you're not paying mortgage insurance. 

LPMI = lender paid mortgage insurance
BPMI = borrower paid mortgage insurance

this is better than FHA as well because FHA tacks on an up-front MIP as well as the monthly, whereas conventional MIP is only monthly.

honestly though, i highly recoomend ponying up a little more cash and going conventional 5% down if that's an option. not much more up-front, but a significantly better loan.