Lending questions -> second/first home

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zigzag_IHB

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I did not really see the right forum for this question, but I thought some of the lending pros here would know the answer easy.



If one is currently renting and desires to buy a "second" home, that will not be the principal residence (say a Big Bear cabin for instance), what is that purchase considered from a lending perspective? And what are the lending guidelines for such a purchase?



Thanks!
 
[quote author="zigzag" date=1211080273]I did not really see the right forum for this question, but I thought some of the lending pros here would know the answer easy.



If one is currently renting and desires to buy a "second" home, that will not be the principal residence (say a Big Bear cabin for instance), what is that purchase considered from a lending perspective? And what are the lending guidelines for such a purchase?



Thanks!</blockquote>


Let me see if I got this right - You are renting, own no homes at all, and want to buy a house strictly as a 'second home' that you will live in part-time?



If so, they will consider it a Second Home purchase. And the lender will be very happy with your honesty, since you could have just as easily said it was a primary residence, considering you own no other property.



Either way, it won't make a difference, since you are going to bring 20% to the table and get the same financing, regardless. :)
 
Another question for the lending pros and the law pros in here: If a borrower quits paying on a HELOC, can the HELOC lender foreclose on the property? Or is there some other route to try and get their money back?
 
[quote author="zigzag" date=1211080273]I did not really see the right forum for this question, but I thought some of the lending pros here would know the answer easy.



If one is currently renting and desires to buy a "second" home, that will not be the principal residence (say a Big Bear cabin for instance), what is that purchase considered from a lending perspective? And what are the lending guidelines for such a purchase?



Thanks!</blockquote>


I have done exactly this... and in Big Bear. The lender will want a significant amount of cash to be put down (30-40%+). If it is a build, it will be 50%+. Of course since you are now making double payments, you will have to have a significant amount of cashflow each month as well as be sitting on at least 6 months of cash liquid on top of a big down.



I went with a super cheap land and a TINY place, this is the type of place I went with (http://www.rocioromero.com/). The cost was very minimal and its about equal to a moderate priced car (~ 400 a month). Right now a somewhat low paying CD is affording that place.

Good luck

-bix
 
Masterofdamoney or LendingMaestro,



When the lenders are calculating DTIs, do the add in the cost of property taxes, PMI, and insurance? If so, do they do this front-end or back-end? Thanks.
 
A HELOC is really just a second mtg that fluctuates in amount. So yes indeed

you can foreclose it. You can't kick out the first mtgee or any lien which for any

reason has attained priority. In Florida there are certain liens that have super

priority. You can look at real estate taxes that way.



Condo dues have a partial superpriority here (Fla). You need to do a title search to

see who needs to be eliminated, and know Cali law to see who can be eliminated.



And I have seen situations where the borrower was paying one of the liens, but

not the other, which of course makes no sense.



I suppose it is possible that a borrower may reason that the 2nd mtgees of the

world have more or less given up and just pay the first. If your property has dropped

20% or more, I suppose this could make a kind of sense, if you are underwater, but

not underwater as to the first.
 
[quote author="IrvineRenter" date=1211263797]Masterofdamoney or LendingMaestro,



When the lenders are calculating DTIs, do the add in the cost of property taxes, PMI, and insurance? If so, do they do this front-end or back-end? Thanks.</blockquote>


Mellarooossssssss, PMI, FHA insurance, property taxes, HOA, hazard insurance, etc... all factored into FRONT END DTI.



Yessir.
 
[quote author="Masterofdamoney" date=1211266356][quote author="IrvineRenter" date=1211263797]Masterofdamoney or LendingMaestro,



When the lenders are calculating DTIs, do the add in the cost of property taxes, PMI, and insurance? If so, do they do this front-end or back-end? Thanks.</blockquote>


Mellarooossssssss, PMI, FHA insurance, property taxes, HOA, hazard insurance, etc... all factored into FRONT END DTI.



Yessir.</blockquote>


Thank you. I thought it was, but I wanted to verify before I responded to a question on the main blog. I appreciate your help.
 
Oh heck. While we are asking lending relate questions, please let me pose the following:



In Old Town Tustin there is a new development of SFRs that are three story. The first floor is zoned** for business use, and purportedly the lease rate would be around $2.45 per sq foot. The second and third floors are residential use. Given that 1/3rd of the property is commercial and 2/3rds residential, what kind of mortgage would one apply for?





**Personally, I think the sales agent was being fast and loose with her terms. I suspect that the CC&Rs;limit use to business on the first floor, not that you would get a ticket from the city for an unpermitted use.
 
[quote author="lawyerliz" date=1211266256]A HELOC is really just a second mtg that fluctuates in amount. So yes indeed

you can foreclose it. You can't kick out the first mtgee or any lien which for any

reason has attained priority. In Florida there are certain liens that have super

priority. You can look at real estate taxes that way.



Condo dues have a partial superpriority here (Fla). You need to do a title search to

see who needs to be eliminated, and know Cali law to see who can be eliminated.



And I have seen situations where the borrower was paying one of the liens, but

not the other, which of course makes no sense.



I suppose it is possible that a borrower may reason that the 2nd mtgees of the

world have more or less given up and just pay the first. If your property has dropped

20% or more, I suppose this could make a kind of sense, if you are underwater, but

not underwater as to the first.</blockquote>
So, if the property is underwater to the first also, it would be a waste of money for the Heloc lender to foreclose?
 
[quote author="EvaLSeraphim" date=1211276442]Oh heck. While we are asking lending relate questions, please let me pose the following:



In Old Town Tustin there is a new development of SFRs that are three story. The first floor is zoned** for business use, and purportedly the lease rate would be around $2.45 per sq foot. The second and third floors are residential use. Given that 1/3rd of the property is commercial and 2/3rds residential, what kind of mortgage would one apply for?





**Personally, I think the sales agent was being fast and loose with her terms. I suspect that the CC&Rs;limit use to business on the first floor, not that you would get a ticket from the city for an unpermitted use.</blockquote>


What? She told me it would be $2.75 a sqft.! I think she lied to you, commercial RE always goes up!



I'm looking at Fannie Mae's site right now, and they will do loans on property with commercial space. I just need to find out what is the % they will allow.
 
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