All Forum Posts by: Zach Wain

@Anthony Jimenez - Jason made some great points.  Seller credits (or your realtor commission as a credit) to have closing costs paid for you or using them for a temporary rate buydown are different tools you can use depending on your short term financial goals. 

An example of a temporary rate buy down is a 2-1.  If you get a 6% 30 yr fixed loan with a 2-1 buydown, the first year your mortgage payment is based on 4% (2% lower than the base rate), and the second year it would be 5%.  6% in years 3-30.  The seller or realtor credits basically subsidize the difference in interest for those first 2 years.

Offering a fast closing is a great negotiating tool as well!

Being pre approved for a 2-4 unit property can be tricky, because VA will allow us to use 75% of the proposed long term rents from the other units towards your income. The more units the more income we can count, which means you can get pre approved for a larger loan size on a 3 or 4 unit. You need a little extra reserves for a multi unit as well.

The other catch, VA wants to know you have experience renting properties or being a property manager to be able to use rental income from the other units. That is an important item!

If your goal is add as many doors as possible, a 2-4 unit home is a great option.  But, see how the supply looks of 2-4 units homes available.

@Kwanza P. - Almost any residential loan (conventional, FHA, VA, Jumbo) can close in a revocable (Living) Trust. We do this all the time! DSCR loans typically require you to vest title in a LLC, but some of our lenders allow us to close in your personal name, revocable Trust, or LLC.

@Eimen Ung - Commercial loans will not count towards your "financed Property" count.  Keep in mind, the Fannie Mae 10 financed property rule only counts when you are buying a second or rental home, you can still buy a new primary even if you have 10 financed properties.

Here is the exact Fannie Mae guideline regarding commercial properties -  

"The following property types are not subject to these limitations, even if the borrower is personally obligated on a mortgage on the property:

• commercial real estate,
• multifamily property consisting of more than four units,
• ownership in a timeshare,
• ownership of a vacant lot (residential or commercial), or
• ownership of a manufactured home on a leasehold estate not titled as real property (chattel lien on the home)."

@James Holmes - it has been a few years since ARM's were competitive. When the yield curve is inverted (2 yr treasury rates are higher then a 10 yr treasury bond) that usually means ARM's will not be priced better then 30 yr fixed loans. The yield curve has recently uninverted, so ARM's are starting to make a comeback. But, I think we need a little more time before they are available and attractive.

FHA ARM's are priced well at the moment, some Jumbo products as well.

Generally speaking, an ARM needs to fit your personal timeline for when you want to refinance or sell, and of course it must offer you some benefit with a lower rate compared to a 30 yr fixed.

@Scott Miller - How many units are you looking at for your initial purchase - 2-4, 5-16, or larger complexes?

2-4 unit homes will be easy, you can purchase those with DSCR loans and get competitive rates across the board.

5-16 can be done with DSCR loans, but you will need to shop a little more to find a lender that is priced well

Larger complexes you will need to do some loan shopping as well, and lenders will be a little pickier 

@Linda Weygant 100% what Patrick said.  But out of curiosity I asked a few of my lenders and one of them said they would accept that version of IRS confirmation for a conventional loan, as long the borrowers name was listed (in the blacked out area I assume).  Is it possible to use this, yes?  But many lenders will not for all the reasons Patrick listed.

 @Fay Chen - You can absolutely do a conventional cash out refi on a rental home in Texas, living out of state does not impact your eligiblity. Many lenders on these forums are great, but some focus and push "DSCR" loans because that is what they sell. DSCR loans should be the back up plan. Conventional rates will be a better combo of low rates, low fees, and no prepayment penalty.

Look for conventional first! Next, look into DSCR loans. If you have any questions let me know.

Bank statement loans definitely have their time and place. Self employed clients with high revenue but their tax returns do not show enough income. Primary and second homes are great! Rentals too. Sometimes the pricing is better then DSCR, sometimes it is not. But, it is a good product to have in your mix.

@Ying Tang - 100% what Mason said.  A no closing cost refi is the preferred option for most scenarios.  If your closing costs are $0, if rates drop in a year then you refinance again without any worries.

Everyone is different, some people love to save $100/mo and some people do not care about saving $300/mo.

But, there are not many things in life that are deflationary.  Refinancing is one of them!  Dropping your payment is meaningful, especially if the costs are $0.  That is free money.  

I think a no cost refi makes sense at 0.5% drop in rate!

Or, you can keep the payment the same and shorten the loan term a couple of years and pay your mortgage off.  Again, free money, just structured differently.  

@Beruk Lessanework - Like most people said it depends on your credit score. One bonus point for FHA is you can do a FHA streamline down the road without any concern over the home value. No appraisal, no income = easiest refi ever.

Conventional loans can be hard to refi because you may not get the same home possible perks on a refi, or the value may drop and kill your refi opportunity.