financing your first investment property
DESCRIPTION
Seattle area Loan Officer Rhonda Porter MLO121324 shares information about how to buy your first investment property for homes located in Washington state.TRANSCRIPT
Financing Your First Investment Property
by Rhonda PorterWashington State Licensed Loan Officer MLO-1213241
Mortgage Master Service Corporation CLA 40445
• Senior Loan Officer at Mortgage Master Service Corporation , where she’s been employed since April 2000.
• Licensed Mortgage Originator MLO121324 for homes located in Washington State
• Author of nationally recognized blog, The Mortgage Porter
• Interviewed by NPR, Seattle Times, MSN Money, WSJ Market Watch.
• 2012/2011 WAMP Outstanding Loan Originator finalist
• Lives in Seattle area with hubby, three kids (off to school), flat coated retriever and kitten
• Enjoys cooking and painting on black velvet (in her spare time)
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Buying Your First Investment Property
• Real Estate is more affordable• Mortgage rates are still historically low• Mortgage programs are available with
lower down payment requirements:• Fannie Mae HomePath• FHA (2-4 units. One unit MUST be
owner occupied).
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Home Prices are still Affordable
Mortgage rates are historically low.
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"Traditional" Conventional Mortgage
Basic GuidelinesMinimum 20% down payment.
Down payment must be from borrower's own funds (cannot be gifted).
Perfect credit scores are not required however the better your credit, the lower your rate will be.
45% debt-to-income ratios
Both mortgage payments (existing and proposed rental payment) will be factored for qualifying with no credit for rental income.
6 months reserves (6 x monthly mortgage payment). Additional reserves may be required if other properties are owned.
Seller may contribute up to 2% towards closing cost and prepaids/reserves if negotiated in the purchase & sales agreement.
When buying a property that has recently been "flipped" be prepared for the possibility of additional requirements from the lender.
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TIP:
A "flip" is generally defined as a property (often distressed) that was purchased at discounted price with the goal of improving the property and reselling at a much higher price.
Fannie Mae HomePath
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Basic Guidelines
Minimum 10% down payment
No private mortgage insurance with credit scores above 660
No appraisal required
Rent credit may be used with bona fide signed lease agreement.
Seller can contribute up to 2% towards closing cost.
Only available for specific homes owned by Fannie Mae (foreclosed).
Conforming Loan Limitsfor King, Pierce & Snohomish
Counties
1 Unit: $506,0002 Unit: $647,7503 Unit: $783,0004 Unit: $973,100
Fannie Mae HomePath properties are generally in better condition that typical distressed properties. Often times, Fannie Mae will make minor improvements prior to putting the homes on the market.
Home buyers who are going to occupy the property get "first dibs" and if the property is not sold as a primary residence, it becomes available for investors as well.
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Eligible properties can be found at www.homepath.com.
Owner Occupied: You MUST live in one of the units for 12 monthsMinimum down payment (3.5% - 5% of sales prices)FHA mortgage insuranceFHA rates and FHA guidelinesUp to 3 month's reserves may be requiredProjected rents may be used for qualifyingSeller may contribute up to 6% towards closing cost, prepaids and reserves
FHA 2-4 Unit Owner OccupiedBasic Guidelines
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FHA Loan Limits for 2 - 4 Units
King, Snohomish & Pierce Counties
2 Units: $726,5003 Units: $878,150
4 Units: $1,091,351
Where do you start?
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The first step is to get preapproved so that you know how much you qualify for before you present an offer on a property.
After you're preapproved, you can select a real estate agent to help you locate your investment property, prepare your purchase and sales agreement and see you through closing.
Typical Documentationfor getting Pre-Approved
Last two years W-2's
Last two years tax returns (if self employed or paid commission)
Most recent paystubs covering 30 days of income
Most recent bank statements/asset accounts (all pages) documenting funds for closing and reserves
Complete loan application
Click here to apply
Additional documentation may be required depending on the borrowers financial situation.
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NOTE:The programs shared here are NOT limited to first time investors!
References and Resources• APR (Annual Percentage Rate)• Calculators• Conforming Loan Limits• Credit Scores• Debt to Income Ratios• Down Payment• Fannie Mae HomePath • FHA Loan Limits• Freddie Mac Homesteps• Income• Loan Application• Mortgage Market Guide Weekly• Preapproval • Rate Quote• Seller Contributions towards Closing Cost• The Mortgage Porter - Blog
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The Fine Print
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The content provided on this guidebook is presented or compiled for your convenience by Rhonda Porter and is provided for informational purposes only. It does not necessarily represent the views or opinions of Mortgage Master Service Corporation.Neither Rhonda Porter nor Mortgage Master Service Corporation assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information disclosed, or represents that its use would not infringe privately owned rights.The information provided should not be construed as offering legal, financial or other advice to be relied on by the reader to make or refrain from making any decision or to take any action.The investment, mortgage or financial services or strategies mentioned in and throughout this website may not be suitable for you.Mortgage Master Service Corporation is an Equal Housing Opportunity Lender. All rights reserved. All content, including but not limited to text, photos and videos are protected by US Copyright. Plagiarism will not be tolerated. Rhonda Porter is NMLS Licensed Mortgage Originator MLO-121324.
Mortgage Master Service Corporation NMLS# CLA-40445.