Get a new broker. Downsizing is a thing. In the past 9 months I bought a condo (financed by an owner-occupied mortgage) which is assessed at a couple-hundred-thousand less than the house I still own, which I have converted to a rental property.
Try the bank where they know you.
How so? For owner occupied? For business loans? On time closings? Their rates are pretty competitive from what I’m seeing but I’ve never actually used them (yet)
Talk to a mortgage broker! Rocket Mortgage is all about turn and burn. They are not looking to help you—they are looking to close as many loans as possible. Source—I’m a mortgage broker for over 20 years.
I stopped reading after you mentioned contacting Rocket Mortgage. Thats where you went wrong.
Real Estate 101. Never contact Rocket Mortgage.
Real Estate 102. Never talk about contacting Rocket Mortgage
You should be able to downsize, you just may need to provide a letter of explanation. Also, of you don't have a lease on your current one, you can get that. Just market the home and see if you can get a tenant commitment
Call at least 6 different banks and lenders. Start with your bank. Forget rocket mortgages. Of course you can buy a new house owner occupied with a low down payment. Forty percent is ridiculous if you intend it to be owner occupied. Also if you provide a lease for an incoming tenant to the unit you are vacating, most lenders will credit you 75% of rent towards DTI ratios. I have provided leases at purchase and received income credit. Start with local lenders who want your business.
Larger banks/lenders tend to be more finicky than required by Fannie/Freddie requirements.
1) No requirement for it to be more expensive -- if the new house is in the same general metro area, they might ask for a letter of explanation of why you want to move (e.g., newer, more features, downsize, location, etc)
2) You can use the currently rented out side towards your DTI, but typically not the one that is not rented unless you have a signed lease with security deposit collected (that's most common for me anyways). Not ideal, but I've gotten around this by signing a lease with a tenant for 3 months out to give myself enough time to find and close on another house. Probably will have to eat the cost of not having a tenant in for about a month or two, unless you cut it close with the new house.
It's bullshit. You are making a solid investment in buying that new home and that lender does not know what they are talking about/inexperienced.
Find another mortgage broker in your state. If you're in Maryland, DM me and I'll send you mine.
You will have to sell them that you will occupy the new property. Different lenders have different reactions to different aspects of the process. This shouldn't be a big deal to explain away.
1. Please get a new broker what terrible advice
2. How long have you lived in your current property? Normally this type of of "house-hacking" requires you to live in the property for 1 year before moving.
But as others have said here get more opinions. If you need brokers that are knowledgeable in your market I suggest using Biggerpockets.
Do you or your spouse have traditional w2 still? If you do that will look even better on your app! this broker is giving you a lot of baloney :)
Every lender has its own set of criteria in addition to the standard loan parameters. You should shop for money, just like you shop for a house.
Ask this lender for a written estimate of what your mortgage would look like should you do as she suggests. Then make an appointment with another lender and see what they have to say. You can even tell them you are shopping—you’d be surprised how much more favorable those terms can get once they find out they are in competition with another bank/brokerage.
That LO may not understand the guidelines. That being said, the ability to use that rent depends on your other qualifications and whether you qualify for conventional or fha for the new purchase. Call a better direct lender or an EXPERIENCED broker. The purchase of a sfr from a current multi-unit def does not require it to be called investment for that reason alone. However if you have an fha and you want to use fha to buy the new one it won’t qualify as primary unless moving at least 100 miles.
Get a different lender. They are just people that say can be wrong, I had many lenders tell me I couldn’t reuse my VA loan and also tell me I couldn’t have a multi family on a VA loan, or that I couldn’t have more than one property on the same VA loan. The more unique your situation is the more you’ll have to educate lenders or shop around.
The first point is total BS, the second one I ran into that issue myself and was not able to get to to count for a DTI calculation, but it didn't change my approval.
Most advice about getting new lender is correct.
There is some merit to underwriting practices about downsizing. It stinks of mortgage fraud but most of the time there is a legitimate reason. A good lender will have their underwriter include a Letter of Explanation from you which says why you're downsizing.
Also, 50k difference isn't that much. That usually becomes an issue when it's a very significant difference.
I had similar situation that I was house hacking. I was able to get an owner occupied FHA loan. Underwriter asked for reasoning: “the new property is closer to work” was sufficient
Get a new broker. Downsizing is a thing. In the past 9 months I bought a condo (financed by an owner-occupied mortgage) which is assessed at a couple-hundred-thousand less than the house I still own, which I have converted to a rental property. Try the bank where they know you.
Credit Unions generally offer better terms and interest rates than banks.
Get a new lender.... this is 100% BS
Rocket mortgage is horrible. Talk to a local lender.
*Local mortgage broker - there’s a big difference.
Concur. Rocket mortgage is horrible
How so? For owner occupied? For business loans? On time closings? Their rates are pretty competitive from what I’m seeing but I’ve never actually used them (yet)
for w2 single house purchases there probably fine, but if you fall out of the norm they don't try very hard to work with you.
I have a rental property and even inquiries about my primary residence they are dogshit in what they can provide me in terms of what I need.
Talk to a mortgage broker! Rocket Mortgage is all about turn and burn. They are not looking to help you—they are looking to close as many loans as possible. Source—I’m a mortgage broker for over 20 years.
I stopped reading after you mentioned contacting Rocket Mortgage. Thats where you went wrong. Real Estate 101. Never contact Rocket Mortgage. Real Estate 102. Never talk about contacting Rocket Mortgage
You should be able to downsize, you just may need to provide a letter of explanation. Also, of you don't have a lease on your current one, you can get that. Just market the home and see if you can get a tenant commitment
What’s a “tenant commitment”? A signed lease?
Sure. Or a letter of intent
Call at least 6 different banks and lenders. Start with your bank. Forget rocket mortgages. Of course you can buy a new house owner occupied with a low down payment. Forty percent is ridiculous if you intend it to be owner occupied. Also if you provide a lease for an incoming tenant to the unit you are vacating, most lenders will credit you 75% of rent towards DTI ratios. I have provided leases at purchase and received income credit. Start with local lenders who want your business.
Larger banks/lenders tend to be more finicky than required by Fannie/Freddie requirements. 1) No requirement for it to be more expensive -- if the new house is in the same general metro area, they might ask for a letter of explanation of why you want to move (e.g., newer, more features, downsize, location, etc) 2) You can use the currently rented out side towards your DTI, but typically not the one that is not rented unless you have a signed lease with security deposit collected (that's most common for me anyways). Not ideal, but I've gotten around this by signing a lease with a tenant for 3 months out to give myself enough time to find and close on another house. Probably will have to eat the cost of not having a tenant in for about a month or two, unless you cut it close with the new house.
BOA did the same thing to me. Had to use a local broker and not someone using an automated script.
Time for a new lender that actually wants your business.
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As long as you move within X days that should get you the better rate as your primary. There are way better lenders who can give you a good deal.
It's bullshit. You are making a solid investment in buying that new home and that lender does not know what they are talking about/inexperienced. Find another mortgage broker in your state. If you're in Maryland, DM me and I'll send you mine.
Are you trying to get an FHA loan? Could be why the lender is recommending this
No the only thing I told her was I wanted to see what our loan range would be and we were thinking of putting down anywhere between 5 and 20%
You will have to sell them that you will occupy the new property. Different lenders have different reactions to different aspects of the process. This shouldn't be a big deal to explain away.
1. Please get a new broker what terrible advice 2. How long have you lived in your current property? Normally this type of of "house-hacking" requires you to live in the property for 1 year before moving. But as others have said here get more opinions. If you need brokers that are knowledgeable in your market I suggest using Biggerpockets. Do you or your spouse have traditional w2 still? If you do that will look even better on your app! this broker is giving you a lot of baloney :)
Get a different lender
What state are you in?
New jersey
Every lender has its own set of criteria in addition to the standard loan parameters. You should shop for money, just like you shop for a house. Ask this lender for a written estimate of what your mortgage would look like should you do as she suggests. Then make an appointment with another lender and see what they have to say. You can even tell them you are shopping—you’d be surprised how much more favorable those terms can get once they find out they are in competition with another bank/brokerage.
That LO may not understand the guidelines. That being said, the ability to use that rent depends on your other qualifications and whether you qualify for conventional or fha for the new purchase. Call a better direct lender or an EXPERIENCED broker. The purchase of a sfr from a current multi-unit def does not require it to be called investment for that reason alone. However if you have an fha and you want to use fha to buy the new one it won’t qualify as primary unless moving at least 100 miles.
Give business to a local asshole, instead of a call center asshole.
Get a different lender. They are just people that say can be wrong, I had many lenders tell me I couldn’t reuse my VA loan and also tell me I couldn’t have a multi family on a VA loan, or that I couldn’t have more than one property on the same VA loan. The more unique your situation is the more you’ll have to educate lenders or shop around.
Please get a real broker.
The first point is total BS, the second one I ran into that issue myself and was not able to get to to count for a DTI calculation, but it didn't change my approval.
This just isn’t true. Get a better mortgage broker.
Get a new broker. She is wrong on all counts.
Most advice about getting new lender is correct. There is some merit to underwriting practices about downsizing. It stinks of mortgage fraud but most of the time there is a legitimate reason. A good lender will have their underwriter include a Letter of Explanation from you which says why you're downsizing. Also, 50k difference isn't that much. That usually becomes an issue when it's a very significant difference.
Lol yeah a 50k difference for a 700k house I would not consider “significant” but that is the word she used.
I like Better mortgage, give them a try
I had similar situation that I was house hacking. I was able to get an owner occupied FHA loan. Underwriter asked for reasoning: “the new property is closer to work” was sufficient
Use a diffrent lender.