Background
I have never bought a home before, so I'm eligible to cash out my nearly ~15k IRA for a first home purchase. I'm also eligible for an FHA loan. However, my employment history is problematic in getting financing. I've been a 1099 and a W-2 employee sporadically over the last few years, hopped around jobs a lot, and therefore my income is hard to predict for lenders.
Goal
Get this cash out of the IRA and in to a property that provides positive cash flow. Living in it rent free is a bonus, not required.
Option A
I've shopped around many lenders, and the only viable option right now is an unqualified mortgage (aka "subprime") for 15% down. Still getting info on the variable interest rate. My friend suggests that I do the math and go for that with the intention of refinancing for conventional down the road.
Option B
I can get a W-2 job within a month, use the paystubs to get an FHA (hopefully). Not sure how long it takes to establish employment history, but I could be waiting up to two years for this route, all for that 3.5% down, 3.5% interest rate.
Problem
Psychologically, I'm tied to the FHA option because it's the only time in my life I'll be able to use it. I want to change my life situation to get it. I know it requires living in the property for 6 months after purchase, so it'll be harder to get positive cashflow right away.
If I get one of these unqualified loans, I can buy a rental property "sight unseen" in a good market and get some cash flow. But it means saying goodbye to the FHA forever.
Questions
I have never bought a home before, so I'm eligible to cash out my nearly ~15k IRA for a first home purchase. I'm also eligible for an FHA loan. However, my employment history is problematic in getting financing. I've been a 1099 and a W-2 employee sporadically over the last few years, hopped around jobs a lot, and therefore my income is hard to predict for lenders.
Goal
Get this cash out of the IRA and in to a property that provides positive cash flow. Living in it rent free is a bonus, not required.
Option A
I've shopped around many lenders, and the only viable option right now is an unqualified mortgage (aka "subprime") for 15% down. Still getting info on the variable interest rate. My friend suggests that I do the math and go for that with the intention of refinancing for conventional down the road.
Option B
I can get a W-2 job within a month, use the paystubs to get an FHA (hopefully). Not sure how long it takes to establish employment history, but I could be waiting up to two years for this route, all for that 3.5% down, 3.5% interest rate.
Problem
Psychologically, I'm tied to the FHA option because it's the only time in my life I'll be able to use it. I want to change my life situation to get it. I know it requires living in the property for 6 months after purchase, so it'll be harder to get positive cashflow right away.
If I get one of these unqualified loans, I can buy a rental property "sight unseen" in a good market and get some cash flow. But it means saying goodbye to the FHA forever.
Questions
- What process can you recommend to evaluate these options? (I use the bookend method right now—projecting best case and worst case financial scenarios for each option, looking at a 10 year runway)
- Are there any other options I haven't thought of?
- What are your favorite methods for evaluating real estate markets for cash flow?
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