Jim Lutz, CCIM
Chris Johnson, RECS
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Jim Lutz,
CCIM
Chris Johnson, RECS
Let me share some information with you about condominium, single family,
duplex, triplex and four plex financing. This information will save you
time and aggravation.
First, let me say financing is going to be different for owner occupied
properties and non-owner occupied properties. All financing is risk based
and there is simply less risk (for the lender) in owner occupied property loans.
The great low down or no down program with a super rate you see on the flyer
you received or on the net is most often for owner occupied properties and full
documentation loans. Many times, the rate you are seeing is an old quote.
Full documentation means tax returns, financial statements, employment
verification and anything else the lender may require. In addition to your good credit you will need a total monthly
debt to monthly income ratio (total monthly debt divided by total verifiable
monthly income) of around 45%. Ask your lender what their maximum debt to
income (backend) ratio is for you to qualify for the loan you are discussing.
If your ratio exceeds their maximum you will have to decide to borrow less,
increase down payment or to go for another (more expensive) loan program.
There are sometimes No Income Verification (NIV) loans, sometimes called
Stated Income loans, and No Doc loans available. For NIV loans your
application will contain the income you state and that income will not be
verified. Even with an NIV loan the lender is going to be looking at that
ratio.
No Doc loans mean exactly that, no documentation, by you, of your past or
current income.
The less information you supply the lender the more costly (points) and
expensive (rate) is the loan, if it is available at all.
About 100% loans, they can be available as a combination of a first and
second loan; however, if you are financing a plex property this way, the cash flow
will be negative.
If you could really buy a plex property with ZERO down and ZERO closing
costs and have pre-tax cash flow there would be waiting lines to sign up.
After 28 years in the business I can tell you it doesn't work that way. No
one is giving money or property away.
Our Team Member Lenders, came up with a few questions for you to ask any lender. These questions should help you get to the bottom line quickly.
12 Important Loan Questions
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How do interest rates and terms vary with the amount of
information that I disclose to a lender?
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What are your down payment options?
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What are lenders looking for in you as the buyer?
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What are lenders looking for in the proposed property?
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How do my credit scores affect interest rates and terms
with a lender?
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How does debt that I now carry effect the type of
program for a purchase of property?
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How do the programs vary for the type of property that I
select?
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What are the loan and financing differences for
purchasing owner occupied property and non-owner types of
property?
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Why might the papers and online services list
such better rates than those I am quoted?
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Why use a mortgage broker to help you with your
investment?
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What should I expect from a mortgage broker?
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Can I buy a property without a job?
Thanks for taking your time, come back often and good luck in your search
for the right financing.
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