All Forum Posts by: Zach Wain

@Jacqueline Floyd - I am confused.  You dont want to buy a primary home because you think the market may get worse in the next year or two, but instead you want to buy a rental property?  Aren't you faced with the same (possible) issue either way?  Rental or primary, you still own a home.  I think owning a home is a good thing and I personally do not think we are going to see a market correction in most areas, but that is my opinion.

When you decide to buy, you can put as little as 3%-5% downpayment for a primary home and get a better interest rate than a rental.  Primary homes are a way better deal when it comes to financing.  Live in the home for 1 year, after that you have met your occupancy requirement for the lender and than you rent that home out and buy a new primary home the next year.  You can do this over and over, to 10 properties.  

Buying a new home every year will help you "dollar cost avg" so you are using the law of averages for when you buy a home instead of getting lucky and timing the market.  Most people fail when they time the market, but if you buy a home every year or two with 3%-5% down than you get in for cheap each time...

They need to speak with a lender who can pull their current entitlement charged for the current loan, and then they need to tell the lender what County they want to buy in and how much of a home and downpayment they plan to purchase.  Then the lender can run the math.  It depends on the details whether its a yes or no...

Those rate ranges all sound fair. Something to consider for the average investor that is curious about DSCR, there are plenty of fine print items. Many lenders give better rates if the appraisers opinion of rents is 1.25%, 1.1% or 1% compared to the mortgage payment. This is hard to do in todays market. If you are below a 1% ratio of rents to payment, the rates get worse and worse.

Also, the best rates for DSCR come with the longest Pre payment penalties. Some people do not care, but so do not want a 4-5 year PPP. Flexibility is an important consideration.

If you hear 7.5% DSCR rates, that probably has 1%-2% in discount points (up front closing costs to buy the rate down), a 4-5 year PPP, and it probably assumes a perfect rents/payment ratio. Most scenarios do not end up looking like that.

Find a lender that you really like and can honest and up front with, and have a good dialogue of your goals with the property besides hunting for the best rate, because that usually ends up poorly...

 I posted about this topic a few months ago on BP, here is the link - 
https://www.biggerpockets.com/forums/921/topics/1093161-new-loan-level-price-adjustments-how-does-it-impact-you?highlight_post=6255421&page=1#p6255421

The headlines are a little misleading.  If you have good credit you are getting a lower rate/paying less than someone with bad credit.  But, the FHFA (Federal Housing Finance Agency) did make the gap smaller.  Last year if a 740 score got a 6% and a 640 loan got a 7% rate, now its more like a 740 gets a 6.25% and a 640 score gets a 6.75% rate.  That is not exact, just an example...

The only exception is first time home buyers that are within the median county income get better rates then just about anyone else.  There were a ton of changes to the pricing hits, but we all know a good headline/click bait is what our news cycle is about.

We are all going to see a lot more FHA loans now, so hopefully any realtors that have had bad FHA experiences will be able to call the lender, review the scenario, and be able to move forward without too many preconceived notations of Gov't loans.

 Thanks Katie, much appreciated!

@Chris Seveney - its possible, but I do not know the behind the scenes of how leveraged small banks and CU's are right now.  It makes more sense on large jumbo loans because they can underwrite less of them but have a larger amount of dollars lent out.  More efficient!  

This makes FHA loans more competitive and we are seeing a big shift even for borrowers with perfect credit scores.

@Tyler Youtzy - This option takes a little time, but if you set up a living trust, and put your $140k liquid into a Trust bank account or Trust stock account (same thing as in your personal name, just more protected) you can take small withdrawals from your own trust, we call them distributions, and we can use that as an extra income source.  That may help get you over the hump in income is light at the moment.

@Adam Joseph Reed - I am not licensed in NC, but a Mortgage Broker will have access to multiple HELOC options and has a better chance of finding a lender that will play ball with your scenario. I have a colleague that runs a great company in NC, I am happy to connect you.

I am sure you are thinking of this, but when you go to resell the property if its still viewed as a Condotel than you might be dealing with less interested buyers compared to a traditional condo.  Are you within your inspection period and able to get that $5k back?