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Posted by paranoid on September 20, 2005, 6:40 am
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This message mat be crossposted in other groups, if so, sorry, I'm just
trying to get a quick response....Thanks in advance
So here is the deal. We own a house with about 40k to 80k in equity
(waiting on appraisal now, should be done tomorrow)....We are in the middle
of refinancing that house, to get a rate of about 1.75 percent lower.
We have decided that we need to move to the other side of town quick
(family obligations have us driving approximately 100-200 miles a day)....so
here is our plan.
Get a HELOC on the house, after the refinance, use that for down payment
on a new house, obtain another loan...
So in short...refinance current house, get a heloc, find property,
obtain financing, move, rent out original house....
Problem:
We have found a property we like, but we cannot obtain a pre approval
letter from the loan officer. He says he doesn't want to sign his name on
anything that he cant guarantee. My real estate agent says without this
letter, our offer wont be accepted....
My middle score is 704, and we are doing a stated income loan (I am
self-employed), and will be doing another stated income on the second
house....
What do we do? We thought about backing out of the current refinance,
and then just getting a Heloc, and obtaining the second loan. Problem,. is
we don't reduce our interest rate on said property, and it will cost us
about $100 a month more, and we are very limited on our budget....Also,
since we will be moving, refinancing the original house again at a later
date will mean, either we lie about it being a primary residence, or its not
worth doing, since it will be considered investment property..
What would you do? We really need to move, Ive considered renting also.
Main goal, is we have to move, before we drive ourselves crazy with all this
driving.
Again, Thanks again....
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Posted by Jeff Strickland on September 20, 2005, 11:42 am
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You didn't say what you do for income. If you are the custodian at WalMart,
then you're going to have trouble stating enough income for two mortgages,
but if you are a Web designer then it is reasonable that you can easily
support two mortgages. The trouble is, if you state enough income, then the
bank will want to verify asssets, and they will want to see something on the
order of 6 months of income in a saving/checking account. The actual amount
of money they want to see varies with each lender.
You current refi is an owner occupied, and you will be moving after you
close the loan. If you do not default on the new loan, they won't care that
your plans changed, but if you do default, then they might come after you
for fraud.
I don't know why you can't get a Pre-Approval Letter from your current loan
officer. He should be able to get you approved for the refi and the
purchase, but maybe he wants the refi to go through first, then start on the
purchase.
I'd take the HELOC, or simply get a Cash Out loan on the existing house for
a short period of time, say 3 years. This will give you a low fixed-rate
loan, maybe even Interest Only. In 3 years you will be faced with another
refi, a sale, or the conversion of the loan to an Adjustable. Most
investors -- you will be an investor in the existing residence when you move
out and convert it to rental -- will take the 3/1 ARM and simply deduct the
refi expenses against the income, and adjust the rent every three years as
the mortgage costs change. I think the 3/1 ARM makes more sense than the
HELOC at this point.
Then take the cash you pull out of the current home and use it to make the
Down on the next home.
> This message mat be crossposted in other groups, if so, sorry, I'm just
> trying to get a quick response....Thanks in advance
>
> So here is the deal. We own a house with about 40k to 80k in equity
> (waiting on appraisal now, should be done tomorrow)....We are in the
> middle of refinancing that house, to get a rate of about 1.75 percent
> lower.
>
> We have decided that we need to move to the other side of town quick
> (family obligations have us driving approximately 100-200 miles a
> day)....so here is our plan.
>
> Get a HELOC on the house, after the refinance, use that for down
> payment on a new house, obtain another loan...
>
> So in short...refinance current house, get a heloc, find property,
> obtain financing, move, rent out original house....
>
> Problem:
>
> We have found a property we like, but we cannot obtain a pre approval
> letter from the loan officer. He says he doesn't want to sign his name on
> anything that he cant guarantee. My real estate agent says without this
> letter, our offer wont be accepted....
>
> My middle score is 704, and we are doing a stated income loan (I am
> self-employed), and will be doing another stated income on the second
> house....
>
> What do we do? We thought about backing out of the current refinance,
> and then just getting a Heloc, and obtaining the second loan. Problem,. is
> we don't reduce our interest rate on said property, and it will cost us
> about $100 a month more, and we are very limited on our budget....Also,
> since we will be moving, refinancing the original house again at a later
> date will mean, either we lie about it being a primary residence, or its
> not worth doing, since it will be considered investment property..
>
> What would you do? We really need to move, Ive considered renting also.
> Main goal, is we have to move, before we drive ourselves crazy with all
> this driving.
>
>
> Again, Thanks again....
>
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Posted by paranoid on September 21, 2005, 3:42 am
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> You didn't say what you do for income. If you are the custodian at
> WalMart, then you're going to have trouble stating enough income for two
> mortgages, but if you are a Web designer then it is reasonable that you
> can easily support two mortgages.
<Owner/operator of home based pc repair business(plus a little pizza
delivery for health insurance and stable cash)
The trouble is, if you state enough income, then the
> bank will want to verify asssets, and they will want to see something on
> the order of 6 months of income in a saving/checking account. The actual
> amount of money they want to see varies with each lender.
<<This good be a bad thing......I have a fiancé, and she is paying half of
the bills, but because her credit score is lower, the agent said the rate
would be higher with her on the loan.....I don't want to have to show 6
months of income at all!!!
>
> You current refi is an owner occupied, and you will be moving after you
> close the loan. If you do not default on the new loan, they won't care
> that your plans changed, but if you do default, then they might come after
> you for fraud.
<< Hopefully, will never be a problem...I have a friend who has 4 houses,
pretty much doing the same thing (even with stated income, and his computer
job)....If I couldn't get it rented, I would just work overtime if I had to,
or rent it at a reduced rate.....I've worked hard to get this credit score
up, and never want it to go low again!!
>
> I don't know why you can't get a Pre-Approval Letter from your current
> loan officer. He should be able to get you approved for the refi and the
> purchase, but maybe he wants the refi to go through first, then start on
> the purchase.
<<A call from my fiancé this morning solved that. Amazes me sometimes, I
talked to this guy twice, and he wouldn't do it.... I guess I left him
enough room to "wiggle" out of it, whereas she did not...
>
> I'd take the HELOC, or simply get a Cash Out loan on the existing house
> for a short period of time, say 3 years. This will give you a low
> fixed-rate loan, maybe even Interest Only. In 3 years you will be faced
> with another refi, a sale, or the conversion of the loan to an Adjustable.
> Most investors -- you will be an investor in the existing residence when
> you move out and convert it to rental -- will take the 3/1 ARM and simply
> deduct the refi expenses against the income, and adjust the rent every
> three years as the mortgage costs change. I think the 3/1 ARM makes more
> sense than the HELOC at this point.
<<It probably does, but we are looking at keeping the house for a long time,
and the rate we locked in is pretty low (5.625)....The plan is to just let
it sit there and get paid off....or move back someday....although the
interest rates on the Heloc may be higher, we can throw money at that pretty
quickly hopefully....
>
> Then take the cash you pull out of the current home and use it to make the
> Down on the next home.
>
That's the plan...
Thanks Jeff, you've given me advice in the past, and always love hearing
from you....
>
>
>
>
>> This message mat be crossposted in other groups, if so, sorry, I'm
>> just trying to get a quick response....Thanks in advance
>>
>> So here is the deal. We own a house with about 40k to 80k in equity
>> (waiting on appraisal now, should be done tomorrow)....We are in the
>> middle of refinancing that house, to get a rate of about 1.75 percent
>> lower.
>>
>> We have decided that we need to move to the other side of town quick
>> (family obligations have us driving approximately 100-200 miles a
>> day)....so here is our plan.
>>
>> Get a HELOC on the house, after the refinance, use that for down
>> payment on a new house, obtain another loan...
>>
>> So in short...refinance current house, get a heloc, find property,
>> obtain financing, move, rent out original house....
>>
>> Problem:
>>
>> We have found a property we like, but we cannot obtain a pre approval
>> letter from the loan officer. He says he doesn't want to sign his name on
>> anything that he cant guarantee. My real estate agent says without this
>> letter, our offer wont be accepted....
>>
>> My middle score is 704, and we are doing a stated income loan (I am
>> self-employed), and will be doing another stated income on the second
>> house....
>>
>> What do we do? We thought about backing out of the current refinance,
>> and then just getting a Heloc, and obtaining the second loan. Problem,.
>> is we don't reduce our interest rate on said property, and it will cost
>> us about $100 a month more, and we are very limited on our
>> budget....Also, since we will be moving, refinancing the original house
>> again at a later date will mean, either we lie about it being a primary
>> residence, or its not worth doing, since it will be considered investment
>> property..
>>
>> What would you do? We really need to move, Ive considered renting
>> also. Main goal, is we have to move, before we drive ourselves crazy with
>> all this driving.
>>
>>
>> Again, Thanks again....
>>
>
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Posted by Jeff Strickland on September 21, 2005, 10:47 am
Please log in for more thread options
>
>> You didn't say what you do for income. If you are the custodian at
>> WalMart, then you're going to have trouble stating enough income for two
>> mortgages, but if you are a Web designer then it is reasonable that you
>> can easily support two mortgages.
>
> <Owner/operator of home based pc repair business(plus a little pizza
> delivery for health insurance and stable cash)
>
> The trouble is, if you state enough income, then the
>> bank will want to verify asssets, and they will want to see something on
>> the order of 6 months of income in a saving/checking account. The actual
>> amount of money they want to see varies with each lender.
>
> <<This good be a bad thing......I have a fiancé, and she is paying half of
> the bills, but because her credit score is lower, the agent said the rate
> would be higher with her on the loan.....I don't want to have to show 6
> months of income at all!!!
>
>>
>> You current refi is an owner occupied, and you will be moving after you
>> close the loan. If you do not default on the new loan, they won't care
>> that your plans changed, but if you do default, then they might come
>> after you for fraud.
>
> << Hopefully, will never be a problem...I have a friend who has 4 houses,
> pretty much doing the same thing (even with stated income, and his
> computer job)....If I couldn't get it rented, I would just work overtime
> if I had to, or rent it at a reduced rate.....I've worked hard to get this
> credit score up, and never want it to go low again!!
>
>
>>
>> I don't know why you can't get a Pre-Approval Letter from your current
>> loan officer. He should be able to get you approved for the refi and the
>> purchase, but maybe he wants the refi to go through first, then start on
>> the purchase.
>
>
> <<A call from my fiancé this morning solved that. Amazes me sometimes, I
> talked to this guy twice, and he wouldn't do it.... I guess I left him
> enough room to "wiggle" out of it, whereas she did not...
>
>
>>
>> I'd take the HELOC, or simply get a Cash Out loan on the existing house
>> for a short period of time, say 3 years. This will give you a low
>> fixed-rate loan, maybe even Interest Only. In 3 years you will be faced
>> with another refi, a sale, or the conversion of the loan to an
>> Adjustable. Most investors -- you will be an investor in the existing
>> residence when you move out and convert it to rental -- will take the 3/1
>> ARM and simply deduct the refi expenses against the income, and adjust
>> the rent every three years as the mortgage costs change. I think the 3/1
>> ARM makes more sense than the HELOC at this point.
>
> <<It probably does, but we are looking at keeping the house for a long
> time, and the rate we locked in is pretty low (5.625)....The plan is to
> just let it sit there and get paid off....or move back someday....although
> the interest rates on the Heloc may be higher, we can throw money at that
> pretty quickly hopefully....
>
>>
>> Then take the cash you pull out of the current home and use it to make
>> the Down on the next home.
>>
>
> That's the plan...
>
> Thanks Jeff, you've given me advice in the past, and always love hearing
> from you....
>
No matter what the loan is, you can throw extra money at Principle every
month. You probably have to do it with your Regular Payment, that is, you
have to make the regular payment and add money to the same check, not write
two checks, or send in supplemental checks between regular payments.
When you send in a check, they take the interest that is due, then they take
impounds (if any), then they apply the remaining amount to principle
reduction. If they want you to send in $1000, but you send in $1250 instead,
then you have just paid your principle an extra $250, without regard to how
much interest is due at that time, or what impounds there might be.
(Impounds are the monies that pay property taxes and home owner's insurance.
I don't know if the entire country has these costs, but I assume they do.)
So, on that $1000 payment, let's say that $700 is interest due, this leaves
$300 for principle reduction and impounds. For the sake of discussion, I'll
say that taxes and insurance cost $100 per month, this leaves $200 to go
towards Principle Reduction. If you paid $1250 instead of $1000, then your
principle reduction would be $450, the $200 that is normal, plus the extra
$250 that you sent in.
You can throw extra money whether you have a fixed rate or a HELOC, so make
the decision on the loan program based on other factors, not on the
prepayment quality of the loan.
Let's talk about a PrePayment Penalty for a moment. All this is intended to
do is to prevent you from paying the loan off during the prepayment penalty
period, typically the first three years of the loan. If you simply throw
extra funds at your loan, you will not trigger the prepayment penalty. You
have to pay off more than 20% of the outstanding balance before the
prepayment penalty is triggered. Most of us will never do that from our
checkbooks, we have to do a refinance or sale to trigger the prepayment
penalty. Now that we are on the subject, there are two kinds of prepayment
penalty, Hard and Soft. A Hard Prepay is triggered on any repayment of the
loan within the prepayment period, a Soft Prepay is a prepay that is WAIVED
if the repayment of the loan results from a sale. If you refinance and have
a soft prepay, then you can be exposed to the penalty, but if you sell the
property then the prepay will be waived.
You want to specify with your loan officer that you want a Stated Income,
Stated Asset loan. If he screws up and gets you a Stated Income, Verified
Asset loan product, then the bank is going to want bank statements that have
some number of months of income as savings - or checking - balance. In
shorthand, you want a Stated/Stated, not Stated/Verified. You may even want
to see if there is a No Income, No Asset (NINA) product available. With a
NINA, the loan officer leaves your employment off the loan application.
Since this has a heightened risk to the lenders, it can carry a higher
interest rate, but it has very easy qualifying guidelines, and the added
cost might be a benefit to you in light of the easy qualifying.
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Posted by Best No Credit Real Estate on September 26, 2005, 4:03 pm
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We have a stated income home acquisition program (purchase) and home
refinance (reacquisition and reinstatement) programs. For more
information go to: http://bestnocreditrealestate.com
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