All Forum Posts by: Trevor Alexander

If student loans are in deferment, the Lender will default to .5% of total balance; in your case, that's $385 per month. I'm still not tracking how you are approved for $800,000 with $30,000 down. That's a $770,000 loan amount and a P/I payment of approx. $4,400-$4,600 per month. Once you add in FHA MI, property taxes, and HOI, you are looking at over $5,000 per month mortgage payment. Is there other income on the file in addition to your $48k per year? Even at $2,500 rents per unit, that's $9K per month in income when you'll need at least $12K of income per month to make the DTI ratios fit.

Is this lender the one that pre-approved you for $800K and are now saying you aren't pre-approved?

Here's where I'm confused....to be approved for an $800,000 loan, you'd need approx. $12,000 in monthly gross income. You make $4,000 and would need another $8,000 in projected market rents from the multi-unit...something's not adding up.

Other notes:

First, you can only purchase a multi-unit for as low as 3.5% down with an FHA loan. A conventional loan would require 25% down.

Second, make sure your lender is utilizing the projected market rents from the unoccupied units. This counts towards your qualifying income.

Third, FHA's DU system will give an automated approve/eligible for someone with 800 credit up to 56.9% DTI. So, even the 52% DTI ratio they are telling you would still allow you to qualify.

4th, if student loans are in deferment make sure the lender is using .5% of total balance to calculate the payment and not the old formula of 1% total balance.

Lastly, FHA requires a self-sufficiency test for 3-4 unit purchases, which is a calculation to ensure worst case scenario all rents from all units (including yours) can cover the PITI payment. This won't show up on the automated underwriting system anywhere, and a Lender that didn't plan and calculate this ahead of time could be in for a rude awakening once the appraisal comes in and there's not enough rents to cover the PITI.

Quote from @Miguel Ortega:

Quote from @Trevor Alexander:

Quote from @Miguel Ortega:

Quote from @Trevor Alexander:

Hi Miguel - is your Principal Residence an FHA loan? If so, It's not impossible to have two FHA loans, but your Lender would need to grant the exception. Below are the possible exceptions to have multiple FHA loans

The big key though it whoever is on the loan to purchase the FHA multi-family must live in one unit for a year. Yes, you can have a non-occupant co-borrower on an FHA multi-unit, but you'll need to put 25% down in order to do that, which kind of defeats the purpose of house hacking.

Yes, my principal residence is an FHA loan. 

So if you fit one of the exceptions above, you can buy the new multi-unit and live in one of the units. If you don't your dad would need to do it in his name alone and live in one of the units. You could also refinance out of the FHA loan into a conventional loan, but would probably need to do is an investment refi if you aren't planning on occupying it for another year.

Thanks for the helpful information. I still have some questions about the FHA loan process. Are you available to connect with me? What's the best way to get in contact with you? Thanks!

 You got it, happy to help. Just shot you a message.

Quote from @Miguel Ortega:

Quote from @Trevor Alexander:

Hi Miguel - is your Principal Residence an FHA loan? If so, It's not impossible to have two FHA loans, but your Lender would need to grant the exception. Below are the possible exceptions to have multiple FHA loans

The big key though it whoever is on the loan to purchase the FHA multi-family must live in one unit for a year. Yes, you can have a non-occupant co-borrower on an FHA multi-unit, but you'll need to put 25% down in order to do that, which kind of defeats the purpose of house hacking.

Yes, my principal residence is an FHA loan. 

So if you fit one of the exceptions above, you can buy the new multi-unit and live in one of the units. If you don't your dad would need to do it in his name alone and live in one of the units. You could also refinance out of the FHA loan into a conventional loan, but would probably need to do is an investment refi if you aren't planning on occupying it for another year.

Origination, Title, and appraisal fees all look about right. 2 points on a 30-year fixed investment loan is the norm in this current rate environment, can even be 3%

The $8,000 other Escrow and prepaid costs seem very high, then again I don't know the New York market. Property taxes and HOA fees may be very expensive there. Escrows and prepaids also very on what month closing is compared to when taxes are due in that particular county.
 

Sounds like a horrible case of service and communication from the LO, plus lack of knowledge or experience as to what's even going on with his/her files.

What it sounds like is your file still wasn't Cleared to Close on the final day of Escrow, and Docs weren't even out. You just had an initial approval with conditions; one of them WVOE's. When the Underwriter reviewed the WVOE's and finalized income, the DTI was too high, hence the need to pay off the vehicle to lower DTI.

Sorry you are going through that. If you switch Lenders this late in the game, sellers could very well terminate the transaction. If the terms are still good, and you have the cash to pay off the car, I'd probably still move forward and fund the loan. Stay far away from the Lender on the next transaction.

Most banks don't like to write small loans (under $100,000); which sounds like it's a catch 22 in your situation because conventional financing needs 25% down on multi-unit properties.
It's too bad the property isn't in Arizona, Colorado, Idaho, Nevada, New Mexico, Oregon, Utah, or Washington; Academy Mortgage can do 10% down investment loans with no PMI on 1-4 unit properties located in those states.

I'd look into a local broker. Rocket is a nightmare from what I hear from many people, and their pricing is also not very good.

Best of luck to you!

Hi Miguel - is your Principal Residence an FHA loan? If so, It's not impossible to have two FHA loans, but your Lender would need to grant the exception. Below are the possible exceptions to have multiple FHA loans

The big key though it whoever is on the loan to purchase the FHA multi-family must live in one unit for a year. Yes, you can have a non-occupant co-borrower on an FHA multi-unit, but you'll need to put 25% down in order to do that, which kind of defeats the purpose of house hacking.

For a 30-year fixed? Are you paying points? That's a great rate. The average rate is close to 6% right now. If you want a better rate than that, look into an ARM. There's always going to be someone out there with a little better rate. I'd shop for value too and not just discount.

Academy Mortgage has a NOO investor product; R/T Refi on 1-4 unit properties 90% LTV, no PMI, follows conventional mortgage guidelines. Cash out refi up to 85% LTV.