All Forum Posts by: Zach Wain

Yup, good call Jay.  The underwriter will definitely ask for a letter of explanation as to why you are moving.  In my experience, underwriters are willing to accept any sound reason besides I want to rent my home out.  The home is too small, I got a promotion and want to upgrade, the neighbors are loud and annoying, etc etc.

If you do not want to be a landlord, sell and move on.  You have a few options for downpayment on your next home.

1) Bridge loan - basically getting a second mortgage on your property and using that for downpayment. Our Bridge loans are currently lower than HELOC rates

2) Get a HELOC now and have it ready

3) Save up at least 5% of your own cash and you can buy non contingent, if your debt to income ratio is low enough

4) Make offers to buy a new home, contingent on the sale of your current home.  Ask your realtor if contingent offers are struggling to get accepted or not and that may guide you

@Ben Sorochuk -  would you be open to buying a new primary home and moving?  Technically, there is a 12 month occupancy cert you signed at closing, but many lenders will let you (the next lender/undewriter on the hypothetical purchase) buy a new home in 6-12 months from the date you closed.  So April 2022 means you might be able to buy a new primary as early as Oct 22.  That way, you can put 5% down.  

BUT - the only way a lender will count rental income on the property you would be departing would be leases.  Even if they are room by room, that is ok, but signed leases and you can negate the payment.  

I am a Mortgage Broker, but we are not licensed in WA so I can not assist.  But PM if have any other ideas or questions.

@Shane Fujimoto - Nice set up!  If you can get a better deal by buying cash, do so.  If not, get a conventional mortgage with 25% down to get the best rate possible if its a long term hold.  

If you go all cash - you can still refinance immediately after and get a conventional loan, its called Delayed financing. You can do this before the standard 6 month wait period if you pay all cash. The lender will require you to pay back the HELOC, but that is no problem, even if you want to take the money out of the HELOC a few weeks after. There is a "cash out price hit", but its very minor if you have a good credit score. That is how I would play it

@Michelle Figueroa I know a great lender in NC.  PM me and I will share his info.  Great guy and company!

Hi Carlos, the secondary market for DSCR loans is so small that I do not think it will have any impact on the market. But, I expect more companies to either pull back, maybe a few more go under, or other forms of volatility. Its a riskier asset, and if the lender does not have big money behind them they might be in trouble. Some companies are run well, others are not. Nothing wrong with a little housecleaning for poorly managed companies.

@Carini Rochester - when did you get a 6.1% DSCR loan with 20% down? And how many discount points? That sounds 5 months or older... Rates are much higher with every single DSCR lender we have access to. Even 20% down conventional rental is about 6.1% today, DSCR has higher risk, difficulty selling those loans on the secondary market, so the rates are much higher.

I am expecting a ton of volatility in the coming months for DSCR loans. Some lenders are going out of business, Fed rate hikes could impact their pricing moreso than conventional/MBS priced products. Be ready for guideline changes, LTV changes, FICO changes, and pricing to swing wildly.

The secondary market for these DSCR loans is drying up, and the cost of holding these loans on the lender warehouse lines is super expensive.

If you have an amazing rate on your current loan, you may want to leave it alone. Its a tough call to make. The VA entitlement is part of the equation to figure out how much VA buying power you have, the other is a the county loan size limit. SFR is X, 2 unit is larger, 3 unit is larger, 4 unit is the largest loan size limit. In high cost counties, like most of CA for example, you get extremely high loan size limits, so it enables VA buyers that have partially used entitlement to still get a ton of home.

But each scenario will be different based on those variables.  What county?  How many units, a new max loan size comes out each year (2023 will likely be higher than 2022), etc etc.

Be careful of large HELOC's right now. A 5.5%+/- rate does not sound bad, until 3-6 months from now its 7.5% or higher as 99% of HELOC's are variable and tied to the Federal Funds rate.