Home loans under 50k-being creative…thoughts?

Question

I know finding  lenders to process small mortgages is almost impossible, but I was wondering if anyone has tried offering to pay additional points to the lender to make it worth their time.. if a lender could get 2k on a 200k loan, hypothetically, would there be a way to offer them the same amount on the smaller loan? I am not a loan expert at all and I am not sure if that is allowed on their end… anyone went this route on conventional? Anyone want to share creative solutions that they have used to get past the lender minimums?

Ashley Cross · Answer

I'm a conventional lender that lends down to $30k. I work with a team so we have the ability to turn a lot of loans in a month. With smaller loans we are capped at the amount of fees we can charge for conventional financing. My thought is we're building a long term relationship and I'd hope to get you to a place we're you'll be purchasing bigger properties with higher loan amounts.

James Tasso · Answer

Thank you for this @Ashley Cross. Do you only lend out of Ohio? If it is okay I would to message you regarding some information! Thanks!

David Ramirez · Answer

Hey James,

Great question. I'm not a loan expert either, so don't quote me on this, but I think it's not worth it for them to allocate small amounts of money considering that they have to meet certain standards and returns for the end lender or pool of lenders. If I were you I would try to network and find someone interested in being a money partner or just a lender. That way you can negotiate the terms of the loan and build a good relationship for future deals. Trust me there are people out there that are more than willing to lend money for a return, you just have to network and have a excecution plan.

Good Luck!

Regards,

David

Jay Hinrichs · Answer

there are private lenders that do this;. . I do it in my day job my specialty is the sub 75k loan.. that said you simply cant be in the loan business without making 4 to 5k a file. either in points or junk fee's you will go broke.. and all those adds of small points get the investors in the door when they get the final settlement statement and see all the junk fee's add up to 10 points or more.  I did one with Civic for a deal in  LA and they charged 800 dollars for tax service was one junk fee it was only 1.5 points but junk fee's brought it up over 10k to get the loan.  And tax service for a 1 year loan give me a break its just everything they can think of in the junk fee department.. Me I just tell my clients I am going to make 4 to 7k but you will end up with property and your payment maybe 20 bucks a month more to take advantage of my services..

so for small balance loans just factor in 5 to 7 k for the loan just like any other loan and expect to pay a rate of 8 to 10% .. still works in those areas were 50k homes rent for 1k .. its all about the numbers at the end of the day.. or just do nothing and the cash buyers will scoop them up.

I help my clients build their portfolios this way.. its fun  but it only works as I say in markets with big spread between rent and PP

Ashley Cross · Answer

We lend in WV, VA, KY, IN, PA, CO, FL, and MI

James Tasso · Answer

Thank you for the advice, David! I never even really considered using people as the lenders. It is very interesting... I am very aware of seller financing, but this is similar to that, but with a person who does not have a vested interest in the property already being the lender, right?

James Tasso · Answer

I am out here in California too, I hear ya there! That's why I am investing out of state.

Scott Wolf · Answer

@James Tasso and @Brendan Lawrence, @Will Barnard is right, private lenders are definitely the way to go for these types of properties, and I'm sure many would take points up front.  But they may also feel more comfortable if you use those funds to reduce the LTV's as opposed to paying more points up front.

Brendan Lawrence · Answer

id be curious to know also.  I see lots of properties that fall in MY budget (insert laughter here) but then I don't qualify because its TOO cheap

Home loans under 50k-being creative…thoughts?

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