Joe 401k?

[(former)FormerSanDiegan]

With a full doc loan, they would like to see a signed lease, with a stated it may not be an issue.

This reminds me of a problem I had about 5 years ago when purchasing a property for rental. It was previously owner-occupied, so there was no current tenant. About a week or so before closing, the lender requests a signed lease for the property to prove income (full-doc loan). My PM company will not advertise a property until I own it. In fact, I am not even sure I can legally lease a property to someone prior to actually owning the property, without adding some additional legaleze to the lease agreement.
This can create a catch-22. At that time my solution was to find a friend who was “thinking” about moving out of his home to remodel. He signed a Month-to-month lease with me that didn’t start until about two months after we planned to close. The lease also allowed that he could get out at any time with 30-days notice. It turned out that after we closed, he decided to wait on his remodel and canceled his lease agreement with me.

[(former)FormerSanDiegan]

With a full doc loan, they would like to see a signed lease, with a stated it may not be an issue.

This reminds me of a problem I had about 5 years ago when purchasing a property for rental. It was previously owner-occupied, so there was no current tenant. About a week or so before closing, the lender requests a signed lease for the property to prove income (full-doc loan). My PM company will not advertise a property until I own it. In fact, I am not even sure I can legally lease a property to someone prior to actually owning the property, without adding some additional legaleze to the lease agreement.
This can create a catch-22. At that time my solution was to find a friend who was “thinking” about moving out of his home to remodel. He signed a Month-to-month lease with me that didn’t start until about two months after we planned to close. The lease also allowed that he could get out at any time with 30-days notice. It turned out that after we closed, he decided to wait on his remodel and canceled his lease agreement with me.

[HLS]

I could do that as a thread, however rates change every day and different lenders have different criteria.
There are hundreds of lenders and it’s impossible to know who is the absolute lowest on any given day…

A 15 day lock is a better deal than a 30 day lock.
A PAR rate will come with a fee, while a “no cost” loan will have a higher rate.

It’s also hard to know what someone actually qualifies for without about 20 pieces of information.
When people hear rates, they always assume that they can get that lowest rate, which isn’t true.

The industry is built on misleading ads getting people to call in, only to find out that they don’t qualify, but are led to a higher product. Many times they aren’t even told about a higher rate until they are signing loan docs.

I’m sensitive to that and don’t like to quote a rate without knowing what someone can really qualify for, but I can post “general” rates any time.

Without knowing the fee to be able to get a rate, it’s hard to compare… A conforming ($417K max) 30 YR fixed is available today at 5.875%, but that’s with a 1 point buy down cost or 6.125% PAR…
30 YR Jumbo ($417K+) rates are about 7% at par or 6.375% for 5 YR ARMS.

Let me know what else you need.

[HLS]

I could do that as a thread, however rates change every day and different lenders have different criteria.
There are hundreds of lenders and it’s impossible to know who is the absolute lowest on any given day…

A 15 day lock is a better deal than a 30 day lock.
A PAR rate will come with a fee, while a “no cost” loan will have a higher rate.

It’s also hard to know what someone actually qualifies for without about 20 pieces of information.
When people hear rates, they always assume that they can get that lowest rate, which isn’t true.

The industry is built on misleading ads getting people to call in, only to find out that they don’t qualify, but are led to a higher product. Many times they aren’t even told about a higher rate until they are signing loan docs.

I’m sensitive to that and don’t like to quote a rate without knowing what someone can really qualify for, but I can post “general” rates any time.

Without knowing the fee to be able to get a rate, it’s hard to compare… A conforming ($417K max) 30 YR fixed is available today at 5.875%, but that’s with a 1 point buy down cost or 6.125% PAR…
30 YR Jumbo ($417K+) rates are about 7% at par or 6.375% for 5 YR ARMS.

Let me know what else you need.

[seattle-relo]

How do you get around the lease issue if it wasn’t a rental previously? My husband travels a lot to the Austin area and have thought about purchasing a rental there. You still can get a decent SFH for around 175K in the nicer burbs that can rent for 1650 a month.

[seattle-relo]

How do you get around the lease issue if it wasn’t a rental previously? My husband travels a lot to the Austin area and have thought about purchasing a rental there. You still can get a decent SFH for around 175K in the nicer burbs that can rent for 1650 a month.

[surveyor]

funny

Funny but my lender did not ask me for a lease when I bought an SFR for rental. Of course, that was probably in the “good old days.”

Just wanted to chime in that SFR’s do have their advantages for investment purposes (they are easier to sell, has some advantages for renting, and the people renting a SFR tend to be more stable), you should really consider purchasing a multi-unit, preferably four units. There is maybe a little bit more work to get the property, but your per unit costs can be lowered (for example, buying a $175k SFR has a per unit cost of $175k, but buying a $350k four unit has a per unit cost of $87.5k).

Also, when you are renting your SFR, you are either fully occupied or not. However, you are still on the hook for the mortgage and other expenses for the time it is vacant. For a four unit, maybe one tenant leaves, you still have three others paying and they will still contribute to the expenses of the property, leaving you with a little better cash flow. Also, multi-units can provide cheaper rent to the tenants and on a cost basis have more people available to rent it.

My two cents.

[surveyor]

funny

Funny but my lender did not ask me for a lease when I bought an SFR for rental. Of course, that was probably in the “good old days.”

Just wanted to chime in that SFR’s do have their advantages for investment purposes (they are easier to sell, has some advantages for renting, and the people renting a SFR tend to be more stable), you should really consider purchasing a multi-unit, preferably four units. There is maybe a little bit more work to get the property, but your per unit costs can be lowered (for example, buying a $175k SFR has a per unit cost of $175k, but buying a $350k four unit has a per unit cost of $87.5k).

Also, when you are renting your SFR, you are either fully occupied or not. However, you are still on the hook for the mortgage and other expenses for the time it is vacant. For a four unit, maybe one tenant leaves, you still have three others paying and they will still contribute to the expenses of the property, leaving you with a little better cash flow. Also, multi-units can provide cheaper rent to the tenants and on a cost basis have more people available to rent it.

My two cents.

[HLS]

Without a lease (or a job), there is no income…
This will be underwriter’s discretion.

Without knowing 20+ pieces of info, it’s hard to say what you could get approved for.
If you are strong financially, with reserves and a good credit score, It could be a 2nd home to some lenders and only a vacant rental to others.

The underwriter just needs to be comfortable that payments can be made. If rental income is needed to qualify, and there are no $$ reserves, it’s tougher, but not impossible.

It’s still possible to get 100% or even 105% financing for homebuyers. There are still subprime programs.
There is an unlimited amount of money available.

Situations that are not perfect cookie cutter may require some work to find a lender that will want that risk, so even though a bank may turn down a borrower, it definitely doesn’t mean they cannot get a loan.
What the rate might be is a different story.

The more secure a lender is, the easier/better the loan will be.
Some people have some crazy financial situations and even with huge income they are difficult to get loans for.

It’s all about qualifying, which just isn’t easy to explain.

[HLS]

Without a lease (or a job), there is no income…
This will be underwriter’s discretion.

Without knowing 20+ pieces of info, it’s hard to say what you could get approved for.
If you are strong financially, with reserves and a good credit score, It could be a 2nd home to some lenders and only a vacant rental to others.

The underwriter just needs to be comfortable that payments can be made. If rental income is needed to qualify, and there are no $$ reserves, it’s tougher, but not impossible.

It’s still possible to get 100% or even 105% financing for homebuyers. There are still subprime programs.
There is an unlimited amount of money available.

Situations that are not perfect cookie cutter may require some work to find a lender that will want that risk, so even though a bank may turn down a borrower, it definitely doesn’t mean they cannot get a loan.
What the rate might be is a different story.

The more secure a lender is, the easier/better the loan will be.
Some people have some crazy financial situations and even with huge income they are difficult to get loans for.

It’s all about qualifying, which just isn’t easy to explain.

[(former)FormerSanDiegan]

seattle-relo : There are many ways to skin this cat depending on your finances.

One way, if you qualify, is to buy it as a second home. You just have to qualify to cover the PITI under whatever Debt Ratio lenders are using (again depends on the lender, as low as 28/36 to 45% or maybe more). For 175K with 20% down at 6.5%, I’m guessing you need to be able to handle additional debt of about 1250 per month (TX prop tax is about 2.5%). For example if you make 150K thats another 10% on your debt ratio compared to your current situation.

If you need the income to meet qualification guidelines, you would likely either need a less than full-doc loan (e.g. stated income) or find a friend that wants to rent your new house (at least temporarily on paper).

For penciling this out, I would assume 25 or 30% down. Loan rates at 6.5-7% (You can probably get as low as 6.25 with full doc, some points, 30% down and good scores, but I like to be conservative). Property tax at 2.5%. Maintenance at 1% of property value per year (in addition to any obvious up-front maintenance/repairs).

There’s probably myriad other ways. Talk to a mortgage broker, who might be able to spell out a couple scenarios for your situation.

[(former)FormerSanDiegan]

seattle-relo : There are many ways to skin this cat depending on your finances.

One way, if you qualify, is to buy it as a second home. You just have to qualify to cover the PITI under whatever Debt Ratio lenders are using (again depends on the lender, as low as 28/36 to 45% or maybe more). For 175K with 20% down at 6.5%, I’m guessing you need to be able to handle additional debt of about 1250 per month (TX prop tax is about 2.5%). For example if you make 150K thats another 10% on your debt ratio compared to your current situation.

If you need the income to meet qualification guidelines, you would likely either need a less than full-doc loan (e.g. stated income) or find a friend that wants to rent your new house (at least temporarily on paper).

For penciling this out, I would assume 25 or 30% down. Loan rates at 6.5-7% (You can probably get as low as 6.25 with full doc, some points, 30% down and good scores, but I like to be conservative). Property tax at 2.5%. Maintenance at 1% of property value per year (in addition to any obvious up-front maintenance/repairs).

There’s probably myriad other ways. Talk to a mortgage broker, who might be able to spell out a couple scenarios for your situation.

[seattle-relo]

Can you recommend a mortage broker who can do loans in TX that can look at our situation and help us decide if its possible? Thanks.

[seattle-relo]

Can you recommend a mortage broker who can do loans in TX that can look at our situation and help us decide if its possible? Thanks.

[HLS]

SEA..

Send me an email at [email protected] with your contact info…
Please post here that have done that so I can look for it. (It’s an address that I don’t check often)

I might be able to help you from here.

[Author]

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