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Financing in 08108 : Real Estate Advice

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Tue Feb 13, 2018
Cdvice007 answered:
I am a licensed home inspector in Indiana. Here may be some helpful information.

Knob-and-tube is a two-wire system with a hot (ungrounded) and a neutral (grounded conductor) only. No separate ground is used, so all receptacles would have been two-prong only.

The home inspector should report any knob-and-tube wiring as in need of further evaluation by an electrical contractor due to the following reasons:

The insulation is often very brittle and leaves conductors exposed when disturbed.

All circuits are ungrounded, which will not suit many modern electronics, such as computers, televisions and stereos.

The conductors are often buried in attic and wall insulation. This is a problem, as they were designed to work in free air.

The wire gauge is commonly 14-awg only, which is not sufficient for most modern household needs.

It's very common for knob-and-tube wiring to have been added to over the years, and it may contain many splices outside of approved enclosures. (Originally, joints in knob-and-tube were all spliced, soldered and taped outside of enclosures.)
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Mon Sep 17, 2012
VA has slightly different guidelines for using rental income to qualify vs. FHA or conventional.

Straight from VA Pamphlet 26-7 Ch. 4 at

Verification: Multi-Unit Property Securing the VA Loan
· cash reserves totaling at least 6 months mortgage payments (principal, interest, taxes, and insurance - PITI), and
· documentation of the applicant’s prior experience managing rental units or other background involving both property maintenance and rental.

What that means is if someone wants to use the rental income for qualifying income, then they'll need a 2 year history of being a landlord or property manager as well as 6 months cash reserves of the proposed PITI payment. The 2 year prior experience doesn't need to be on the subject property, it could be for a different rental property the homeowner owns or a prior one that they have owned, but either way verification is needed (i.e. tax returns showing rental income on Schedule E).

Even if the rental income in question cannot be used to qualify, debt ratios of ~50% are able to qualify for VA mortgages. VA is more concerned with residual income requirements and does not have a maximum debt ratio, but a lot of lenders have overlay guidelines not to permit more than a maximum debt ratio (50%, 55% & 60% are common maximums).

Shane Milne | Lending in all 50 states | NMLS #81195
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