All Forum Posts by: Stephanie Medellin

@Daniel Tineo No, there's no way to bypass the self-sufficiency test for FHA. It's there in case of default / foreclosure. They want to limit losses and make sure the building can support itself - that's why your income isn't relevant to the self sufficiency test. One suggestion is looking at higher value 3 and 4 units. Do they rent at higher price points? Since you can use 75% of the rent from the other units to help qualify, you may qualify for a more expensive building that would meet the self sufficiency test.

@Aaron Henricksen  As mentioned, if you cannot qualify solely on your personal income and need rental income from this property to qualify for a conventional loan, you will need to have a tenant with a lease in place.  You can only use a rental estimate from an appraisal on a purchase.  Once you own the property, you'll need to have it leased out to use 75% of the rent.  

@Steven Macdonald  This would not work on a conventional loan, especially for investment properties.  You would need to be within the combined loan to value limits, and they don't go to 100%.  If you're going to live in the property you could probably use a seller second, but you would still need a small down payment.

If you're planning to buy and hold another property with the funds, choose the cash out refinance and lock in a fixed rate long term. Your rate on the HELOC will likely be higher than what you could get on a 30 year fixed rate cash out refinance.

A HELOC is better in the short term if you're planning to repeatedly use the money, pay it back, use the money, pay it back, etc.  If you just need a one time lump sum, and do not plan on paying it back within a year or two, borrow it at a fixed rate.

Straight from Fannie Mae: 

The unit must not have been previously installed or occupied at any other site or location, except from the manufacturer or the dealer’s lot as a new unit.

FHA has the same restriction. I believe VA may be the only one that MAY allow financing on a home that has been moved from it's original location.

Your buyers will also have a much harder time getting financing on a single wide home.  If considering this as an investment, you may want to consider keeping it as a rental, or offering seller financing.

@Account Closed For conventional financing, it's great if you own your home free and clear - that way you only need your self employment income to cover your home's taxes and insurance, along with other monthly debt payments. Assuming you qualify income-wise to cover those personal expenses, conventional financing should be possible. If you're buying and financing one at a time, you just need to have them leased out before moving onto the next. 75% of the lease must cover the rent in order to preserve your DTI. You should be able to use the appraiser's opinion of market rent (75%) to qualify, just make sure it covers the monthly payment or you'll need more of your own income to make up the difference.

If you own it and it's not leased, you won't be able to count the rental income on the next purchase.  If your plan is to rent them out on AirBNB without an annual lease, this won't work.

As you acquire more and more properties, you'll need more $$ in reserves and higher credit score to qualify.  

@Patrick Flanagan  It sounds like this won't pass the self-sufficiency test.  In the event you default, 75% of the rents need to cover the mortgage.  This is 100% of rents from all 4 units, less a 25% vacancy factor.  In your case since all units rent for $1000 it works out the same either way ($1000 x 4) - 25% = $3000, or $1000 x 3 = $3000, but if you have units that would rent for different amounts, you need to use the first formula to figure out whether it meets the test.  Can you offer less, put more money down, and/or buy down the interest rate to where the payment is lower than $3000/month?

@David S. Refinancing out of a private loan is basically the same as refinancing out of any other loan.  Just be sure to keep a copy of your note, and be able to document the agreed upon payments on time every month through cancelled checks.  Since they will probably not report this loan on your credit, you need to be able to show on time mortgage payments with your application.  Whether you can qualify for a conventional loan without working depends on whether your rental income can support your personal housing and monthly expenses and the rental property expenses.  It really depends on how much positive rental income is on your tax returns.

@Marco Fontana  Talk to a NY mortgage broker.  Cash out on an investment is much more likely to have points right now.  It's certainly possible to find a rate with no points, but it really depends on your scenario, primarily credit score and how much equity you have.  

@Kyle Moore  Yes, there is an expectation that you will continue to live there for 12 months after closing on your new loan.  To get the better rates offered to owner occupants, you are expected to use the house as your primary residence.