All Forum Posts by: Sasha Mohammed

generally, "townhouse" is not a real thing. its typically either a condo, or an attached SFR... could also be PUD. I think once my career have a seen a title report show "townhome" or "townhouse". if you're unsure, check title.

Condos definitely have added restrictions vs SFR. the questionnaires for financing as @Luis Somoza mentioned above can pose challenges for any type of financing. If the association is not adequately funding a reserve account for example, or if the concentration of renters vs homeowners is too high -- these all pose issues, whether its a HEL, HELOC, or even a traditional 1st mortgage.

even a 1st mortgage will have added LLPAs (google: loan level price adjustments)/ fees for condos vs. SFRs. generally speaking, the price point advantage of a condo is nice, but if you have the ability to swing an SFR, you will reduce a lot of headache down the road for most (if not all) types of financing.

I agree with @Kevin Post, right now would not be the time to refi as you'll likely want to keep your interest rate intact. 

the rule is 1 year at your primary before you can buy a new one, but its not hard-and-fast. If there is a legitimate reason for the move (job transfer, growing family, need to move closer to aging parents), an underwriter can and will use discretion to allow you to purchase a new primary within the 1 year mark. 

Be aware that if you intend to utilize an FHA loan on the new primary, there are added restrictions here. 100 mile rule being one of them.

As for the debt, with STR it is a bit limiting. but if you can stomach a long-term rental for a time first, the rules for "departing residence" will let you use 75% of the lease to offset the PITIA of THIS property on your DTI for the new primary purchase. You can't get positive rental income this way, but it could potentially wipe out the debt for DTI purposes on that transaction. 

ahh then the 100 mile rule wont apply to you at all. but you should be able to use the rental income from the conventional-financed property based on how you've filed that rental income on your schedule E.

still, you can use the rental income from the other units on the purchase, so i'm not sure how your broker could tell you definitively you don't qualify without knowing what property and what rents the other tenants are paying. unless you're just suuuuper unrealistic with your purchase price vs existing income, or if your schedule E on your other house is filed at a loss. 

i think in this situation you need to find out from what standpoint your current broker is saying you don't qualify. 

the 100 mile rule typically only applies from FHA to FHA, HOWEVER! if you want to use the rental income from the departing residence (conventional), you do again need to meet the 100 mile rule. in this case, you can use 75% of the new lease to offset existing PITI on the property, but you cannot get positive rental income on the departing.

for the new purchase, being an FHA 4 unit, that self-sufficiency test is a big one to be mindful of, as @Matthew Kwan mentioned.

You also can use lesser of: 75% of the lease or appraised rents on the other non-owner-occ units of the FHA purchase to help you qualify, but you cannot qualify SOLELY on these rents (if it would even pencil out that way).

FHA multi-family is one i dont even bother trying to tell someone if they qualify or not until i see the numbers on the subject property in question. there are too many variables to consider which are property specific. for example: what are the current tenants paying?

we just ran into a similar question -- someone who had bought at an auction with limited to no rehab needed. We ran it by a conventional lender to see how they would handle delayed financing. 

answer: we could immediately use new appraised value, however, the max LOAN amount was capped at purchase price plus closing cost from the auction transaction. 

same cash-out LTV maximums applied, so long as the new loan did not exceed the above, we were good to use appraised value.

if you wanted a loan to exceed the original purchase price plus closing-costs, then you would have to wait the 6month seasoning for a traditional cash-out refinance. 

OR you could try to go with some type of NonQM lender; there are some that will let you do cash-out with new appraised value within 3 months, so long as you can document the renovations. Which, in your case, there don't seem to be any. 

we can ballpark all day long, if you want to get an idea. But that data is only as good as it is accurate. 

Also, there are a lot of things the general public doesn't know to share with their mortgage pro. one example: if you have a car payment (for purchase, not for lease), and there is 10 or less payments remaining, we can omit that car payment from your ratios. 

if asked if you have a car payment, you may not know to tell me its almost paid off. a less experienced mortgage pro may not think to ask how many payments left. 

also, there could be some collections from yeeeeears ago you've forgotten about entirely a credit report would show. maybe you had lates that would pose challenges and you dont think about it or realize it could be important. 

i also find people give me scores based off their credit karma (or similar credit reporting) which may wildly differ from a mortgage pull (different scoring models) and they are left surprised when their "740 fico" is actually 712, which would put you in a different credit bucket for pricing/ rates. higher rate = higher payment, could = less purchasing power. 

point is, its all just talk until we do the legwork. if you're serious about buying, WHEN you're serious about buying, do the credit check. save yourself the heartache of surprises later

Tough situation, sorry to hear about it. HELOCs are tied to fed funds rate, and as others have mentioned, there will likely be another rate hike in Feb. Some good news, though, it seems those rate hikes are slowing down, and depending on inflation data, may stop soon. 

Mortgage (1st mortgage) rates, however, are not directly tied to fed funds rate, and are more closely tied to Mortgage Backed Securities. As @Scott E. said, these have been going down lately. 

If you can stomach it for a bit longer, be prepared for another hike soon on the HELOC, but keep an eye out on 1st mortgage rates. maybe do some number crunching on a cash-out refi on your 1st mortgage consolidating and paying off the HELOC. figure out what rate you would need in order for the entire balance to result in a payment you're comfortable with. and then maybe reach out to your trusted mortgage professional to let you know when the rates get close that benchmark.

depends on the deal as others have said. 

I just priced out a 4-unit today with one of my most aggressively priced DSCR lenders on a purchase, 30 year fixed, 75% LTV, was giving me 8% and i would be at 1-3 points origination. If it were more heavily cash-flowing, rate would have been less. Also if it were an SFR, it would have been less. just as an example.

You should be able to buy down the prepayment penalty if that is your hesitation. sometimes you can increase the rate for less PPP and sometimees you can pay more points up front for reduced PPP

This deal above would be 8% with a 5 year step-down PPP,  8.5% with a 3 year step-down PPP, or i could do an 8.875% with a 2 year step-down PPP. 

i feel like i should be disclaiming this, so just.... *this is for educational purposes only.* GL!

Hi Leo! 

First off, Kudos! not many your age thinking about this stuff yet. I'll try to break down a few initial thoughts simply, forgive me if its a bit disorganized. 

FHA 3.5% down payment for MF really only applies to duplexes. You CAN do 3 and 4 units with 3.5% down, but do some digging on "self-sufficiency test" for 3 and 4 units. this poses a bit of a challenge in my market (CA), may pose a challenge in yours too.

Your serving job may be considered "variable income" and will be averaged over a 2-year period if you're not full-time. Tips (reported tips), overtime, bonuses... all a 2 year average. may be worth making sure you are considered "full time" or have "full time employment" before you apply for a home loan; otherwise, taking a few less hours here and there could result in dropping your purchasing power in the 11th hour. 

Self-employment needs 2 year's history, but if the car payments are part of a business, you may be able to exclude these payments from your DTI ratios (the expense would probably have already been hit against your gross income, no reason to hit you twice). i'd have to look into it, but... are those car payments made out of a business bank account? or your personal?

Hint for self-employment income: "depreciation" write-off is gold, saves you $ with uncle Sam, AND can be added back in for DTI calculation purposes. Talk to your CPA about this one.

If you can stomach room mates, the bedroom rental house hack is fantastic. TBH i'm doing this myself. Depending on the loan limits in your area, and what you qualify for with income, you may be able to do 3% or 5% down on a single-family, conventional financing, and be in a significantly better loan than FHA. I guess the big question is -- how much do you value your privacy :) also maybe look into SFR with an ADU.

hope this was helpful to some degree! Wishing you the best of luck on this journey! 

Since the property is in Arizona (one of the tougher states for licensing requirements), I would start with someone local.

if you find that you don't qualify full-doc, or prefer to go with a commercial loan, BP has a lender list under "network" tab, you could start there. 

My only recommendation is you find a brokerage that is very familiar with investor financing instead of direct-dialing lenders yourself. This will help you work through the nuances of your specific deal, and sometimes result in better terms as well due to a pre-existing relationship with the lender.