by Mark on November 11, 2007
Do you want to start investing in Real Estate but don’t have much of a down payment or maybe your credit isn’t that great? There is a little known secret to help buyers like you that want to buy some income property but they don’t have enough down payment for a conventional investment (non owner occupied) loan. The solution may be an FHA loan on a 2, 3, or 4 plex. FHA loans allow for a buyer to buy a duplex, a triplex or even a four-plex with just 3% down and as always FHA loans are not underwritten based on credit scores but credit situations.
These is a catch however. Because FHA is an owner occupied loan program, the buyer needs to move into one of the units. But this could be a great way for an entrepreneurial buyer to get started on investment property ownership. The other advantage to using an FHA loan program to buy a 2-3-4 plex property is that the FHA loan limits get higher as the number of units go up. Here are the current loan limits is the Denver Metro Area:
2-plex = $347,322
3-plex = $421,980
4-plex = $486,900
So as long as the LOAN amount (not purchase price) is under these levels then an FHA loan can be used.
There are a few more things that you need to keep in mind if this is a good option for your buyers. This is still a FULL DOCUMENT loan and unless there are current leases on the property that can be extended, we will not be able to use “potential” rental income to offset the payment in the Debt To Income ratio. Therefore the buyer would have to qualify for the entire payment themselves. If there are current renters in place then we could use 75% of those rent payments towards the debt ratio. However, The renters would have to enter into new leases with the new buyer.
As far as the interest rates go, there is no penalty for buying a property like this using an FHA loan. It would be the same rates as if your buyer were buying a single family home. Right now those rates are around 6% to 6.25%.
If this is something that you think could help you now or in the future, feel free to contact me with any questions.
Thank You,
Mark Afman
Direct 303-759-7392
Cell 303-905-2488
Written by Mark Afman -
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by Larry D. McGee, Denver Realtor on November 7, 2007
In this post I will tell you why I am not crying for big builders and big lenders.
As for the big lenders, it is important for the consumer to understand where mortgage money comes from. Today, it mostly comes from Wall Street, in the form of bond investment. Billions of dollars in bonds, sold with the promise of repayment by homeowners, securitized by the home they are living in. There is absolutely nothing wrong with this, and the basic process is not going to change. The problem arises when Wall Street gets greedy. Mortgage loans are made available based on the premise that home values will rise, and, in the event of a homeowners need to sell, there will equity available to pay off the mortgage. When there is no equity, and homeowners have to move, foreclosures occur. The greed part is [click to continue...]
Written by Larry D. McGee, Denver Realtor -
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by Larry D. McGee, Denver Realtor on November 7, 2007
Taking a look at the world economy today, there appears to be a better than even chance that bond prices will go up. You can do your own research, my point here is what that means to mortgage rates. Most casual observers mistakenly believe that the lowering of rates at the Federal Reserve Bank results in a lowering of mortgage interest rates. Not true. Mortgage rates are tied to bond prices. If bond prices go up, mortgage interest rates will go up. Here is one example:
NOW LOWER PRICE SAME RATE
Purchase Price: $300,000. Waiting for Lower Price: $280,000.
Todays Interest Rate: 6.25% same interest rate: 6.25%
Down Payment @ 10%: $ 30,000. Down Payment @ 10% $ 28,000.
P & I Payment: $ 1,662. P & I Payment: $ 1,552.
HIGHER INTEREST RATE LOWER PRICE, HIGHER RATE
Purchase Price: $300,000. Purchase Price: $ 280,000.
Later interest Rate: 7% Higher Rate: 7%
Down Payment@ 10% $ 30,000. Down Payment @10% $ 28,000.
Later Payment: $ 1,796. Later Payment: $ 1,676.
As you can see from the table, waiting for a price to drop $20,000 with a correspondent interest rate increase of 3/4 % will actually result in a [click to continue...]
Written by Larry D. McGee, Denver Realtor -
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by Vali Wimberly on November 6, 2007
The Slopes are open and ready to go but are YOU? The Colorado Pass is being sold only until November 11th and after that it will be gone like the wind.
The pass is the most affordable and versatile pass currently available. The pass has a couple variations but the core pass includes unlimited skiing/riding at Breckenridge, Arapahoe Basin and Keystone. One can add on 10 days at Vail and Beaver Creek for a few more bucks.
Many who have recently relocated or just haven’t ever gotten the pass don’t realize it’s only available at the start of the season and by the time you are hitting the slopes regularly it’s too late–don’t get left out in the cold.
Written by Vali Wimberly -
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by Larry D. McGee, Denver Realtor on November 5, 2007
Denver’s Rocky Mountain News carried an article in the November 3rd edition headlined “Denver Builders skirting bottom. The article, written by long time real estate reporter John Rebchook, spoke to the plight of the home builders and made reference to this downturn being “different from the one two decades ago” As Paul Harvey says, there is a “rest of the story”.
It is definitely true that this downturn in housing is different from the one that occurred in the second half of the 1980’s. The major difference is [click to continue...]
Written by Larry D. McGee, Denver Realtor -
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