Title may be a bit misleading but I have a simple question regarding loans and foreclosures. Is it considered a bad move to obtain a personal loan in order to purchase a foreclosure? I only ask because it seems to easy and simple to be the right move, or maybe I'm over thinking it. For instance, if I was interested in a bank owned property that the bank wanted $40,000 for and I only had $20,000. If I had access to a personal loan for $20,000 that would allow me to purchase the property wouldn't that be the way to go, with the understanding that the interest rate on the loan is less than 6%?
Dustin, Are you purchasing this home at an auction or as a listed property? If you are purchasing it at your Public Trustees office, you will need cash or a Line of credit from the bank that is readily available to you when you bid on the property. If you purchase it as a listed property through a broker, banks don't have any issue with the buyer using a loan to purchase. If you are bidding against cash buyers it makes you a less viable candidate, but other than that it doesn't matter. Cheers!
What so you mean by a personal loan? What maters is not the kind of loan, or what it is called but the terms and rates.
If you are talking about a signature loan where you just borrow the money without using the property as collateral, that is fine. Just be sure you understand the terms of any interest rate adjustment of the ability of the bank to call the loan due.
I you mean getting a private loan from friends or family, lots of investors are successful with that strategy
The property is up for auction. The idea that I had was to have a personal loan to purchase the property. The terms are good for a signature loan and the bank in which I do business with is fully aware of my intent. The biggest concern I had was if someone were to outbid me, which is a possibility, I'd be stuck with this loan. However, the bank just told me to pay it off before the first official statement period and I'd be good to go no interest acquired. Small town bank, easy to get along with those people.
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