Seeking Reverse Mortgage Advice for a Potential Deal
Backstory: A friend of mines, who isn't on BiggerPockets, has been offered to purchase the home that they are renting. I have offered him a few options, but he would like to see if anyone has any other creative solutions.
There are 2 main challenges that he is facing:
1.) He can't get approved for traditional financing because his current income it too "new." He has tried to bring on 2 family members as co-signers but they still aren't able to get approved for the mortgage that they need.
2.) There is a reverse mortgage (RM) on the property, so time is of the essence.
Property details:
Type: Single family residence
RM payoff as of April 2020: ~$470k, we are guessing it's around $480k-490k at the time of this writing (Nov 2020)
Market value: $700k-$750k, based on recently sold comps of same exact home
The seller is asking for $70k proceeds from the sale of the home.
Any advice or tips are greatly appreciated.
Thank you in advance!
One option would be to present the deal to a hard money lender or private lender. You'll pay a much higher interest rate, but then can refinance the home with a traditional lender after a certain amount of time.
This may not work for your friend's financial situation, but it's one option to consider looking into. You can find lenders using the NETWORK search tool at the top of your screen. Be sure to vet them!
Hey @Warren Rubin the only thing somewhat creative would be to try to get the loan for the 490k instead of the 560k and get the seller to take a 2nd on the property after closing. Maybe borrow a little money from relatives to try to give the seller some cash up front in return for waiting on the rest of his 70k. Maybe even give him very little down and then no payments for 1 year or interest only or something to get the payments to be somewhat small. After a year or two, the buyer's income should not be "new" anymore and should be able to refinance to pay everyone off
@Nathan GesnerThanks for the advice! I feel like hard money may not but their best bet but I'll still let him know about it to provide him with options.
@Rick Pozos That's a great idea! I just told him about this and he's going to see if he can negotiate something with the seller.
He just told me that him and his co-signers were able to get pre-approved for $470k.
I did offer him a lease-option deal. I would purchase the property and essentially buy them some time to get traditional financing in place.