All Forum Posts by: Stephanie Medellin

@Russell Beach  Is the seller willing to provide a 2nd loan?

@Alex Moazeni It's really hard to say without looking at your paperwork. If they are counting rental income from your tax returns, maybe you have too many write offs on your schedule E. Even if the rent covers the mortgage, often people write off other expenses and the rentals actually become a liability for lending purposes. Did you recently add any monthly payments / debt? Buy a new car? Higher balances on your revolving accounts? All of those things can impact the debt to income ratio too. Maybe there's something you could pay off to lower the DTI. Other things that can help: buy down the interest rate, lower your loan amount, increase the loan term (if it's lower than 30 years).

@Geoffrey Gabala Unfortunately yes, this is accurate. Hopefully an FHA loan will work for your purchase with 3.5% down. That's probably your best option.

@Lindsey Matejak The payment reporting on your credit report is what will be used in your DTI calculations. If you are not using the majority of the line, or not using the line at all, it won't count against you.

@Drew Clayton  In order to use income from both jobs, she will need to have been at both jobs for the past 2 years.  There's not really a way around that rule.  If she's making a good income at her W2 job and is full time, she could qualify based on that income and leave out the self employed income.  Or she could use her self employment income alone.  This may mean qualifying for a less expensive house.

@My Pham  Any conventional loan will need the lease to extend at least 5 years past the term of the mortgage.  If you're taking out a 30 year loan, the lease will need to be for at least 35 years.  Ideally, it will be even longer than that.  If you want to sell in 10 years, you will then be limited to someone who can qualify for a 20 year loan.  The difficulty in financing these properties is one reason why they are less expensive.

What are your long term plans for the property?  Keep it forever as a source of retirement income?  Pass it down to a family member?  If the lease expires and the owners will not renew, what happens to the property?  Will the land lease double in cost?  Triple?  

You don't have the same long term protections for a property on leased land.  It may be a bargain now, but costly later.   

@Kalib Williams  Each new loan that you take out against your primary residence will have language in the documents that you intend to live there for at least 12 months.  If it's no longer your primary residence, you would apply for an investment property loan.

@Account Closed  Appraisal waivers are great, but 2-4 unit properties, and properties using rental income to qualify are not eligible, so you're going to need to get an appraisal for a conventional loan.  If it doesn't come in at the value you need, you can always pay your loan balance down enough to have 25% equity.

@Thomas Powers  You would typically need to take the property off the market in order to refinance.  Most lenders will not approve a refinance if it's listed for sale, and certainly not if it's under contract to be sold, as they will get penalized if the loan is paid off too quickly.

@Chris Parker  Do you own 7 or more financed properties?  That's the only scenario that would require a 720 credit score or higher.  Otherwise it sounds like a lender "overlay," which is just a stricter requirement for one particular lender.  I've heard some of the larger banks are not doing cash out refinances on investment properties right now, but plenty of our wholesale lenders are. 

There are no conforming loan requirements to have a 700 credit score to do a cash out refinance.