I’m planning on buying a home next year with a couple of friends living with me. They will pay me rent money while i apply this towards my mortgage payments. Since i want to generate cashflow immediately i also wanted to reduce the monthly payments as much as possible.
I was thinking of putting enough down payment(80%LTV) to avoid escrow, taxes, & pmi and use my tax return money whenever i file to help pay for the first two. The 80/10/10 plans will help avoid pmi but what about escrow? Or find a house that is discounted enough to accomplish my objective, but the house would probably need some repairs and i know nothing about fixing homes(or even deal with it).
Basically i want to put the least amt of money upfront and reduce my monthly payments as much as possible(aren’t we all).
I’m open to any ideas, suggestions, or criticism that you experts might have.
Some mortgage companies give you the option of escrow or not. You may try Indymac Bank. I have 9 loans with them without PMI or escrow but they are investor loans at 70 % LTV. Their number is 800-781-7399. I hope they can help.
Depending on your credit and income, you can even get an 80/20. That’s what I got for my son. Either one does not require escrows or PMI as the first mortgage is who determines that. However, my son’s taxes are $5k and insurance $1k. Be sure your tax return is big enough to cover your T&I.
Thanks for the replys. I wasn’t sure if they just based pmi and escrow off the 1st mortgage or not. Yeah since the price of the house i plan to purchase will be between $115-125k my tax return $$ will cover most but not all estimated tax & insurance. It helps though.
Bennie,
There are ways to avoid PMI, yet escrow and taxes will be connected in some way or another. You may be able to pay for these outside of your loan, yet the lender my hit you with add ons to your rate. They feel much safer when you have those included in your monthly payment, as they know you are keeping up with your obligation to pay property taxes. So basically, you wil pay for these one way or another, so I would include them as it simplifies the process for you and the lender. Plus the fact you will not add on anything to your interest rate.
Aloha
As a Loan Officer I would suggest an IO loan basically youd be paying the interest only and insurance so youd only be paying MI. you can go to Countrywide to find out a rough guestimation on this. The reason being is that well you`d be getting positive cash flow. When you decide to sell you-l have made out like a bandit.
cons: you need to have a good credit score, 620 or better depending on the lender.
Are you doing this loan as an Owner occupied because you said that these friends are living with you and they will pay you rent?
You don’t need to know much about repairing a house just get three bids on a house and pick the middle bid. I would get with an investor that can mentor you or go to your REI Club in your local area and they would be able to refer you to a contractor or handy man.
Like Dubank stated you really cant get out of paying for hazard insurance or property taxes when you own a property other wise your are putting your self a risk for not having your property insured or you could lose the property if you don’t pay your taxes depending on your state. this can happen in a matter of months.