All Forum Posts by: Stephanie Medellin

There are some really good answers here already. I'd add that for conventional loans, a single family home with 2 ADUs, permitted or not, is not an acceptable property type. Only one ADU would be allowed for financing purposes. I've found that non-QM lenders can be more conservative when it comes to the collateral, so absolutely check if your lender will accept an SFR with 2 ADUs. You may need the property converted back before closing.

If the ADU is not permitted, it's unlikely any value will be added because of the ADU, and rental income from the ADU also will not be counted.

You can do a no DSCR or no ratio loan, where you can get financing even if the property does not have positive cash flow. Again, even in this case you'll want to check if the split ADU would be acceptable.

Unless you know for sure you'll be moving or selling a in few years, go with the fixed rate.  Even if you think you'll be moving or selling in a few years, we have no idea where the real estate market will be and you may be better off keeping the property and/or won't be able to sell for the price you need.  In that case you'll be better off with a fixed rate.  I am not seeing ARMs at rates much lower than fixed rates anyway.  In some cases they are the same price or even higher than fixed rates.  No reason to take such a big risk for a long term hold to save 0.25%.

99.9% of lenders will not take a consumer ordered appraisal.  The loan officer may look at it and use the comps and data in a dispute, just as they could independently look up that same data and use it in a dispute.  I would not waste the money ordering an appraisal outside of the loan process.  

Comps for appraisal disputes typically need to be more similar (size, condition, bed/bath count), more recent, and /or closer in location than the comps used.  They need to have closed on or before the date of the appraisal, and typically you'll only get one chance to request a reconsideration.  Active and pending sales will not count.  Did your comps meet those criteria?  If so I would push back, but if not, the appraiser really may have chosen the best comps for your property.  Again, they need to be closest in size, condition, location, and the most recent sales available.  With condos, sales in the same complex would be most similar.  If there are comps with the same floor plan those will usually be selected first.

Right, any loan that stays in place remains in first position.  The private money would be 2nd, and the seller carryback would be 3rd.  You generally can't offer seller financing unless the property is free and clear - the current loan most likely has a due on sale clause where it would need to be paid in full if the property is sold.

@Lexie De Stefano If you've made 12 consecutive mortgage payments from your own account with no lates, and you're also obligated on the loan (which I'm assuming you are), your family member can omit this debt when they go to purchase a home for themselves (their lender can omit it from their DTI, they still have to disclose it and document the 12 payments). If it hasn't been 12 months, they're probably out of luck, but sometimes people aren't aware of this. At least that could buy you more time to qualify for the refi. If it's a single family home, you won't be able to count income from roommates unless you can qualify for one of the affordable loan options. Those don't allow cash out, however.

@Michael Shank Yes, that should've said to deduct the PITIA, which also includes the monthly HOA fees.

@Jacob Switzer  The 5% down on 2-4 unit properties is available through a program called Home Possible.  It is an "affordable" conventional loan, and will only work if you're under the income limit for your area.  In higher cost areas this typically doesn't work, because people need the rental income to qualify, and once that's factored in, they're over the income limit.  St. Louis might have 2-4 units that are inexpensive enough to make this possible.

You can own one other property with this loan, so you can keep your current house and move into the new property.

Find a mortgage broker in your area to run the numbers for you.  Most wholesale lenders offer Home Possible.   

@Michael Harris Same answer as above - any traditional lender is always going to take the lower of the purchase price or the appraised value to determine the LTV, and there are no 100% financing programs that I've seen for an investment property. Think about it this way - if the property is really worth $250,000, why wouldn't the seller sell at that price? If they can only get $184,500, that's likely closer to the market value, so that's the amount lenders will use. Especially in this real estate market with inventory so tight, sellers typically try to get full market value.

@Robert Cuomo You might as have your name on the deed if you're providing 100% of the funds. Hire any potential investors to manage the project instead and split the profit.

@Albertinny Colin  What type of property are you trying to buy - single family home, 2-4 unit, 5+ units?  Are you going to live there or will it be a rental?  Are you trying to finance 100% of the purchase or do you have a down payment and if so, what percentage?  If this is a 1-4 unit property, conventional and government loans have fairly standard guidelines to follow.  A seller 2nd may be allowed on some programs if you meet the minimum down payment, the question is what's the benefit of splitting the amount you need into 2 loans?  Is the seller giving you better terms than you could get with an institutional lender, and if so, why not finance the whole purchase through the seller?  

If you're trying to finance 100% of the purchase, I think you're going to have a hard time finding lenders to entertain that scenario.