FLU,
It’s a long answer to what should be a simple question…
First of all, FNMA guidelines now say that if you do not have at least 30% equity in your primary home, to be able to finance a non-owner purchase you will not get credit for any rental income from subject property.
You need to qualify, full doc, for both property loans, + taxes, ins, HOA etc.If you DO have 30% equity, you get credit for 75% of gross rental income….
This is to keep people from “buying and bailing”
They figure if you have 30% equity in your primary, you won’t walk away.
Per FNMA, you can buy a non-owner with 20% down, but you get better pricing with 25% down.
Assuming 25% down, Rate with 1pt today is 6.625%, but the buy-down options are VERY low…
By buying down with 1.7pts, you can save 1.375% in rate, down to 5.25%
OR
buying down with 2.3 pts saves you 1.63 in rate down to 4.99%
The buy-down takes you ahead after 15-16 months, previously unheard of on a 30 YR Fixed rate.
What this means is that people who are getting no cost loans OR who don’t buy-down the rate are getting screwed royally in the long run, (assuming that they keep the loan)
Last thing is financing CONDOS primary OR non owner can be very difficult today..
Many associations are in huge financial trouble.
For a loan submission, it can cost upwards of $100-$200 up front just to get the documents that the lender wants to review regarding the association financials etc. Then the loan gets denied.
As always, rates subject to change 🙂
There is NO GOVT program at 4.5% today.
If it actually happens,
From what has leaked that I know, it will NOT apply to non owner or refi’s….only purchases.
