Good morning, Memphis! It’s a great day to start living your dream! You’re on the Real Estate Mortgage Shoppe program. I’m your host, Jo Garner, mortgage professional with Evolve Bank and Trust. Today we’re talking about “Live Your Dream Using The Power Of Leverage On Your Real Estate And Your Money.” You can play it safe and tip-toe toward your dreams or you can do the hundred yard dash and get where you want to be faster. We have Jeremy Veldman of Turn-Key Properties here in the studio today to help you start leveraging your real estate to build wealth. Jeremy, its going to be a fun topic today. Let’s hear a little bit about you and what you can do for real estate investors.
Its going to be a terrific topic. And to our listeners, if you have a real estate or financing challenge, call us on the air at 90 535 WREC. That on-air number again is 901 535 9732. If you are looking for information or solutions concerning your real estate property, your real estate financing, your credit, or building your real estate portfolio, we want to hear from you today.
• Rates moving up over the last two weeks reminds me of watching Pole Vaulting during the Olympics. Rates vaulted up higher than they have been all year. The 30 year conventional rate this week is around 4% with no points. Several days ago the conventional rate was around 3.5% now up to 4%. FHA/VA – 3.25% or 3.75% 15 YEAR FIXED – 3.125%
Where are these rates going? Watching as the major mortgage investors spin around trying to figure out how to price their loans is like watching a good game of pin-the-tail –on –the donkey. The blindfold won’t come off until the Jobs Report comes out again.
But it’s a still a great time to buy a house or refinance one. If your rate is 5% or higher, there are refinance scenarios out there that can make you some money. Prices on homes are doing some pole vaulting too, but there are still great opportunities out there to buy real estate for your home or to build your real estate portfolio.
If the deal works for you today, do it today. My very experienced assistant, Susan Belew and I would like very much to talk with you. Call me off the air and let’s go over your financing options. Its free to check it out. Some people spend more time shopping for a television or even a carton of milk than they spend checking out something that could potentially earn them back 100’s of dollars. Susan and I will walk you through the process. With just a little information , we can put together accurate estimates to compare. Our off-air number is 901 482-0354.That number is 901482 0354 catch me on my blog www.mortgageloansblog.com
Jeremy, real estate investors can take advantage of the HARP program where can refinance your properties without an appraisal value with certain restrictions. This special program works for your primary residence, 2nd home OR investment property. If you have an FHA loan on your home or investment property, we can refinance that one with NO appraisal at all. If the lender has told you that you need to bring a lot of money, you need to talk with Susan and myself. Call us at 901 482 0354. We have ways of keeping more money in your bank account and STILL lowering your rate.
I have money out there to help you find money to pay down if you’re buying a rental property, a primary residence or a 2nd home. If you are a first-time homeowner, there are several down payment assistance programs available (some restrictions apply on these.) If you are buying real estate for investment, I knew a few places we can look to help with your down payment amounts.
Susan and I have seen So Many success stories over the last few months. We have had some listeners on this show call us and admit that they had been procrastinating about calling. When we did the financing scenarios for their refinance, they were SHOCKED when they discovered they would be saving over$300, $400, $500 or even $900 per month on payments. Others have been able to shorten the term on their loan substantially and save TENS of thousands of dollars.
Our customers who have been out shopping for houses to buy as a primary residence have been SHOCKED to discover how low the house notes are when the rates are as low as they have been. In so many cases, it is MUCH cheaper to BUY than RENT. When it comes to Rent vs Buy, especially in Memphis, Buying tends to be cheaper if you are planning to hang onto the house for at least 5 years or more.
If you are planning to buy a house to use for investment and you’re on the road to building wealth, leverage can give you a great return. I have ways of helping real estate investors get leverage by buying rental property for little or nothing down.
Jeremy, you are an expert on building wealth in real estate. How do YOU advise the real estate investor to use LEVERAGE to build wealth?
Questions answered by Jeremy Veldman
1 What are some suggestions or real live stories you can share to illustrate an effective way to deal the PEOPLE involved with the transaction?
2 What components make up a great real estate deal?
3 What kind of terms can you get using private money to buy real estate?
4 What is your philosophy for real estate investing?
Questions answered by Jo Garner
1. What kind of financing can you offer investors? For people buying property to rent out for investment, on a single-family home, if the investor owns less than 4 financed properties, they can purchase with 20% down payment or they can refinance up to 75% loan-to-value. If they cash out mortgage companies usually stipulate a max loan-to-value of no more than 65%.
The lending rules are different for real estate investors owning over 4 financed properties. If they own between 5 and 10 financed properties, not many companies will offer a cash out refinance, but the investor should be able to refinance their existing loan for at least 70% of the value of the home. They can purchase another rental property too as long as they do not exceed 10 financed properties in their name. Borrowers who own more between 5 and 10 financed properties are also required to show a lot more money left in reserve for emergencies than if they owned 4 financed properties or less.
If the borrower is trying to buy or refinance their primary residence there is no limit on the number of other financed properties.
2. Where can people find money for the down payment?
Gift From Family: Gifts can come from family members or employers. The amount of the donation varies according to different loan programs. The donor will be required to document the source of his funds and that the money is a gift to the donee not requiring repayment. If the family member giving the money does not want to cash in a certificate of deposit or stock fund, he can borrow against the asset to give to the donee.
Borrower’s Forgotten Assets: Whole life insurance policies or annuities may have a cash value that can be borrowed. Many times the borrower does not realize the insurance she purchased years ago has a cash value that can be borrowed to pay the move-in costs.
Loans secured on certificates of deposit, stocks and bonds, and durable assets such as cars can be used as acceptable sources of funds to close as long as the loan is secured on an asset owned by the borrower. The payment must be added into the debt-to-income ratios for qualifying purposes
IRAs, 401(k)s and Retirement Funds. There can be heavy financial penalties for pulling money from these sources. However, many companies allow the homebuyer to borrow against these assets with no penalty. The repayment terms may be calculated in the borrower’s debt-to-income ratio.
Sale or Cash Out Refinance of Existing Real Estate Property can generate needed funds to close on another property. Lenders will require the HUD 1 Settlement Statement or sufficient proof of the source of funds.
Tax Refunds can provide a surprising source of closing funds.
Move-In Costs Paid By Third Parties: Sellers are as motivated to sell a house as the buyer is to purchase. Sellers can pay up to 3% of the sales price toward the buyer’s costs if the borrower is getting a conventional loan above 90% loan-to-value. If the loan-to-value is 90%, the seller is allowed to pay costs up to 6% of the sales price or value whichever is less.
On certain loans, the sellers are allowed to pay more and even loan the borrower the equity on a second mortgage. Investor loans allow the sellers to pay no more than 2% no matter how much money the investor pays down.
Lenders are motivated to close the transaction and sometimes can bump up the interest rate slightly in order to use “premium pricing” to pay the borrower’s prepaid taxes and insurance or some of the closing costs. In most cases the rate is increased .25% and the difference in the monthly payment is minimal.
Government agencies such as Tennessee Housing Development Agency have programs that provide down payment assistance to borrowers. Some of the well known programs are City of Memphis Down Payment Assistance, Shelby County Down Payment Assistance, United Housing, Inc, H.E.L.P., Rural Housing, Shelby County Neighborhood Stabilization etc For the down payment assistance grants and loans, the borrower is required to meet a minimum or maximum annual income guideline and sometimes are required to be first time homebuyers. First time homebuyers are defined as buyers who have not owned real estate in the last 2 to 3 years.
3. How should an investor best prepare when applying for a real estate mortgage?
-Latest paystubs, (in some cases all pages of the last 2 yrs signed tax returns) check adjusted gross income first. Remember you can add back depreciation usually appearing on the Profit and Loss page.
-Last 2 months bank statements. Remember large deposits other than payroll will require you to document a papertrail on a large deposit.
-If you own real estate properties, be prepared to provide mortgage statements for each property. If the property is NOT escrowed you will need to provide the lender a copy of the tax bills and insurance declaration pages detailing the homeowners insurance cost on each property. If the property is subject to association fees, you will need to document them also.
The lending industry is continuing to tighten restrictions.
4. What is the biggest difference between financing for a real estate investor buying a rental property as compared to someone buying a house to live in as a primary residence?
Jo to discuss the fact that rates are unusually low right now for investors so the rate would be only less than 1/8th higher than the terms offered on a primary residence. The biggest difference is the investor must pay down between 20% of the price of the house and 30%. The person buying to occupy the home would only be required to pay around 3% and usually not more than 10%.
Also, for investors, the seller is only allowed to pay 2% of the home price toward the buyer’s closing costs. Whereas the seller can pay 3 to 6% of the price toward the buyers closing cost if the buyer is purchasing a home where he intends to live.
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Real Estate Tip of the Week Set aside time to ask questions and consider your goals and options. Ask a trusted lender to do the numbers for you and give you information about the payment amount and move-in costs on the house you are about to buy. If you are buying to rent it out, check and see what the market rent amount would be for that property. Formal education will get you a job. Self-education will make you rich.
Experienced Lenders, Experienced Realtors, and Other experienced investors you find in real estate networking clubs can be great advisors.
Talk about MIG meeting coming up www.memphisinvestorsgroup.com
Jo Garner has two announcements:
Talk Shoppe offers free education and networking for anyone interested in real estate or business. This Wednesday at DeVry University from 9A to 10A Aaron Ivey and Bonita Elam of Enterprise Property Management will be discussing Property Management Solutions. The Talk Shoppe events are free. For more information about Talk Shoppe go to www.TalkShoppe.BIZ
Next Saturday on the Real Estate Mortgage Shoppe program, Tom King of King and Vaughan Consulting will be on the hot topic of our Shelby County property taxes and how to appeal them. Join us next Saturday 9A to 10A CST right here on News Radio 600 WREC
Transitional Music: “9:15 AM “Dreams” by the Cranberries ;9:30 AM “To Morrow” by the Muppets;9:45 AM You Make My Dreams Come True by Hall and Oates
Jo Garner is a mortgage officer with extensive knowledge in tailoring mortgages to her customers who are refinancing or purchasing homes all over the country. She offers conventional, FHA, VA or other loan programs for refinancing and purchases.
Jo can help you look at rent vs buy, when it makes sense to refinance, how to get the best deal on your home purchase financing.
Jo Garner has been in the real estate/financing business for over 20 years in Memphis, TN. She got her start in Portland, Maine where she first began her real estate career. She received her real estate education from the University of Southern Maine and was personally mentored in San Diego, California by Robert G. Allen, author of Nothing Down, Creating Wealth and The Challenge.
On moving back to West Tennessee in 1987, she went into business buying and selling discounted owner-financed notes secured on real estate. In 1990 Jo went to work for a residential mortgage company and has been a mortgage loan officer for over 20 years. Her goal is to offer excellent, affordable service to her customers, tailoring the loan programs to the specific needs of her clients.
In addition to her work in the mortgage field, Jo Garner is the primary sponsor and founder of Talk Shoppe in Memphis. She hosts the Real Estate Mortgage Shoppe program on News Radio AM 600 WREC in Memphis and on IHEART radio 9A to 10A CST every Saturday.
For real estate financing solutions, plug into the Real Estate Mortgage Shoppe program. You can find mortgage rates, FHA Streamline refinance with no out-of-pocket costs, refinancing options, home purchase loan programs, answers and real estate, money-saving tips and more.