I’m looking to buy a place in DFW area. 129k purchase price. I want to finance 90% on a pay option arm if possible. My credit score is 650, I have four other mortgages and my debt:income ratio is garbage. Thoughts?
So you have a 650 mid, NOO, 90%, purchase, stated self employed??
I am not self employed, the rest is correct
Dave,
How long have you owned the other properties?
So you own other properties. Then you’re considered self employed. Question is if you’ve owned properties for at least 2 years in order to satisfy the requirement for a stated income program. Are you employed full time (hourly/salary) in the same line of work for the past 2 years?
Also remember that a stated income program is not to “work you way around” the debt to income ratios. It will be up to you to put on the application what your gross income is. Any more than that could be determined as fraudulent. Make sure that when you are signing loan apps that the income figures are what you disclosed and not what a loan officer used to make the deal work.
You’ll also need assets, six months worth of whatever the expected mortgage payment would be.
If you have this then consider a no ratio program which no income is even listed on the application so no ratios are calculated.
If no assets then you may need to consider a no income/no asset (no doc) loan.
I’m a CPA at a big four accounting firm so I have a decent salary, but not that great. I’ve worked there for 2+ years. I own 4 properties. The longest one I have held for three years. One is about two years and two are under a year.
Dave,
Because you have owned the properties for longer than two years you could be considered self-employed; however I think you would be better off going stated wage earner which will allow you to use your gross salary as well as your gross rents. Is there a reason you are looking at the option arm other than for the low minimum payment? If you are going to be hanging on to this property there are other loan products out there that may serve you better. Also, is the property currently rented? Are you in the DFW area?
The property is currently rented. I’m in NYC. I would consider a 30year fixed with an interest only period.
So you own other properties. Then you’re considered self employed. Question is if you’ve owned properties for at least 2 years in order to satisfy the requirement for a stated income program. Are you employed full time (hourly/salary) in the same line of work for the past 2 years?
Please advise how this actually works. I was unaware that if someone owns multiple properties for over 2 years they can go stated. I have dealt with investors, and I guess rookie/average loan officers who have walked from deals b/c they couldn’t secure financing for someone w/ a similar scenario. 65k job, 3 properties, 1 over 2 years and 2 about 18mnths, and a 620 mid …The lender they were dealing with gave 75% credit from the leases but his DTI with the new purchase would have put him into the mid 60’s…
Any clarification would be great.
Luxx
Slam dunk.
JngleDave,
I just checked over a couple of my lenders and with the parameters that you’ve disclosed so far it appears that this scenario would be ok. Interest only as well. There are a couple other questions as to when exactly the properties were purchased, but we can discuss offline if you’re interested.
Please advise how this actually works. I was unaware that if someone owns multiple properties for over 2 years they can go stated.
Luxx,
That’s what the underwriters tell us. Because you’re operating the business of buying/selling or leasing properties that could qualify as being self employed.
However, if rental income is the sole source of income, then I wouldn’t do a stated income loan. The gross income alone is usually not enough to cover the mortgage payments + other debts and meet the debt to income ratio. A no ratio maybe an alternative. If I was dealing with a client that needed a nonconforming loan and the lender didn’t offer a no ratio program, I’d most likely have to turn down the deal.
OK, so far at 90% I am seeing mid 8’s for 30 year fixed with an interest only portion. Can anyone do better or do the pay option arm? Thks.
It’s very well possible that there are lower rates available to you but a lot of the brokers on this site will not just toss them out.
You need to have a consultation so the appropriate questions can be asked.
consider refinancing the other properties to an LLC to get them off of your credit.
I have a DFW lender who can help you with this if yours can’t (or won’t).
How do you refinance the property to an LLC to get them off your credit?
Is that the only way to get the property under the LLC after you individually purchase it?
Wouldn’t a lender have to give you a Mortgage for the property in the LLC name? I have been having a hard time finding lenders that would loan to an LLC.
I am seriously interested in learning the process of refinancing or quit claim deed my properties to LLC, I just don’t know how or knew anyone that could guide me in the right direction.
Yes, I too would be interested in hearing about this process. Can you provide me with the lender who will do this? Thanks.
you can get the pay option arm but you need to put down 10% and show assets, with a 680 noo we can go stated stated ive done this before
An option arm is for investors that want tax write off and positive cash flow … 30 year fixed 10 year inteast only or 50 year loan. Will work for you.Send an email will go over this with you.