Posts from November 2024

When you are shopping for mortgages, you may come across the term "conforming loan." Is that something different than a conventional loan? Does this matter to you as a borrower? Here's a quick explanation of conforming loans.

Fannie Mae and Freddie Mac

Although all conforming loans are conventional loans, not all conventional loans are conforming. A conforming loan is any conventional loan that meets certain criteria set by the Federal Housing Finance Agency. The main feature of these criteria is the limit on loan size. In most areas of the country in 2020, that limit is $510,400 for a single-family home. In higher-cost markets such as San Francisco and New York, the cap is $765,600. Loans that exceed these dollar caps are called non-conforming or jumbo loans.

Each year the FHFA surveys lenders to gather current data on home sales prices, interest rates, and terms, then calibrates the conforming loan standards accordingly. Price caps vary down to the county level.

The size of a loan is not the only factor that makes it conforming. Other criteria set parameters on the loan-to-value ratio, the borrower's debt-to-income ratio and credit score, and the amount of the down payment.

Two quasi-federal agencies, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Association (Freddie Mac), will agree to insure conforming loans offered by private lenders. Fannie and Freddie often purchase these loans from lenders to offer to the private investment markets in bundles. This replenishes money to the lender to loan out to other borrowers. Jumbo loans are not eligible for Fannie or Freddie backing.

What is the benefit of a conforming mortgage?

Conforming mortgages typically offer lower interest rates than non-conforming loans because they are less risky. Additionally, with a conforming mortgage, you may get some wiggle room on the down payment amount and the credit score needed to qualify. Keep in mind, though, that If you put down less than 20 percent of a home's purchase price, you'll be required to buy private mortgage insurance (PMI) to protect the lender in the event you default. A monthly PMI payment uses money that could otherwise be used to build equity in the house.

Because they are relatively easy to qualify for and offer lower interest rates, conforming loans can offer substantial benefits to borrowers.

I can assist in getting a Great Mortgage resource for your real etsate or real etsate investing 

Click here for After Pictures 

The properties only had one tenant meaning that Tenant has been in that property for 54 month's.

The rehab on this property was approximately $19,000. Let's look at the income let's look at what we deposited in the owners account

2020 there was $8657 net

2021 there was $12,091 net

2022 there was $6730 net 

2023 there was $5596 net 

2024 there was $7392 net .

For a total total of $40,465 so far for this property. 

We had to replace the heater and some plumbing which would be taken care of but this particular property doesn't have the warranty on it. But if it did, it would save this investor a lot of money. The good news is they still made a time of money

The rents were increased in 2022 $1250 a month and in 2023 they were increased to $1300 a month. 

We will be increasing the rent to $1350 a month at the end of this year. 

Let's look at what the properties worth today per MLS

The property comps at $195,000 

Let's look ? at the blended return

Rent $40,465 + $195,000 - $95,000= $100,000 

Net total approx net return $140,465 or a 30% return 

Call me (Brett) 216-703-5740 Key Realty and Property Management 

This is another great example of how our properties are left from our tenants. We are very careful who we put in our tenants because that creates a lot of costs to the clients and me as an investor if I put the wrong people in a rental property . This video shows you how someone just left one of our properties They've lived in for almost 2 years. We have less than $1000 that we have to do the property to get it back up to snuff. We will have this on the market in 5-7 days. Imagine the opposite of that if you have a bad Tenant ? A lot of investors don't understand that every time someone moves out you're gonna have some rehab how much rehab are you gonna have? It's all according to quality, tenant and quality ofproperty you purchased That's why I am very careful what I buy and where I buy it. It's not always just the purchase price and the rehab up front. It's the after effects of the property and the tenants in it that's how it's gonna really produce income for a client. Good news for our clients we get 24 to 28 months stay for tenants with our properties on average. Need someone who really watches out for your good I've done over 1200+ houses and understand what's needed in a good property. Better Real-Estate exceptional results Call me (Brett) 216-703-5740 Key Realty and Property Management

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