Seller Buydowns for Investment Property

3-2-1 and 2-1 seller buydowns allow homebuyers to have below market interest rates. The seller is essentially prepaying a portion of the buyers mortgage payment to effectively “buy down” the payment for a specific period of time.

With a 2-1 buydown, the interest rate will start off 2 percent lower than the note rate for the first year, then 1 point lower for the next 12 months. The third year and remaining term, the interest rate (and payment) will be the actual note rate.

The 3-2-1 buydown has an interest rate that is 3% lower the first year, 2% lower the second year, 1% lower the third year and the fourth year and remaining term, the buyer pays the note rate.

The cost of the 3-2-1 and 2-1 buydowns is the difference between the note rate payment and the reduced payments.

Typically, these temporary buydowns have only been available for owner occupied properties. I’m pleased to share with you that we have this available for 1-4 unit investment properties too!

A 3-2-1 buydown for a non-owner occupied property can really be a great tool for investors by having a dramatically reduced payment for the first couple years allowing for an improved cash-flow.

Bonus: if the property is refinanced during the buydown period, the homeowner receives the balance of the remaining reserved buydown funds.

If you’re selling a home, offering a buydown can help attract potential buyers.

Please contact me for more information.

Big Expensive Changes for Second Homes and Investment Properties

Last night, Fannie Mae announced they are essentially going to be limiting how many second homes and investment properties they will provide mortgages for. This is largely due to the additional risk associated with second homes and investment properties. This goes into effect with loans delivered to Fannie Mae on April 1, 2021 – which pretty much means “immediately” as mortgage loans are delivered to Fannie Mae (or Freddie Mac) after they close…sometimes weeks after they close with the originating mortgage company. [Read more…]

Converting your existing home to a rental property

mortgage porter sold home

If you are buying your next home, you may be considering converting your existing home into a rental or second home. The lender on your new home will have different requirements depending on what type of financing you’re obtaining. [Read more…]

eBook: Financing Your First Investment Property

This is the second edition of my slide-book, Financing Your First Investment Property.

In this edition, loan limits and mortgage programs have been updated.

If I can help you with the financing of your first (second or third) investment property located in Washington state, please contact me!

Determining Rental Income for a Conforming Mortgage

iStock-000018668640XSmallRecently Fannie Mae updated their guidelines for rental income, including the addition of Rental Income Worksheets for the lender to complete to help make sure the rental income is calculated correctly. How much rental income may be used and how it is calculated will depend on when the borrower obtained the rental property, when rents were collected and what how many units there are with the subject property. Underwriters are looking the likelihood that the rental income will continue as well as the losses too. If your rental is producing a net loss, that will factored into your qualifying ratios.

[Read more…]

Buying a Duplex to live in with an FHA mortgage

mortgageporter-seattle-duplex-1One of my favorite blogs to follow, Get Rich Slowly, recently published Reader Stories: I bought a duplex to save money on rent. The author of the post describes how he used an FHA mortgage to buy a duplex and with renting out the unit he was not living in, he wound up paying less for his housing than when he was renting.

[Read more…]

Buying Your First Investment Property Guide Book

This is my first “book release”…okay… it’s an “electronic book” or what I refer to as a “guide book”. I plan on writing several books on mortgage related topics.  This book happens to be about buying your first investment property. 

Although the book is focused on first time home buyers, the information also applies to investors who are buying their second or third investment property.

Watch for more topics to follow soon! You can find this and other slide books at the Mortgage Porter Library.

Buying a 2-4 Unit Home using an FHA Mortgage

mortgageporter-seattle-duplexEDITORS NOTE: This post was written in 2013. FHA loan limits have changed as well as the interest rates posted below. Please see the bottom of this web page for current FHA loan limits. If I can provide you with a current rate quote for your home in Washington, please click here.

If you are considering buying a duplex, triplex or fourplex and you’re going to live in one of the units, FHA is a possible mortgage option.

[Read more…]