How get loan for lower priced properties?

[Ryan Judkins]

I have two homes in Missouri that I made offers on for $63k and $77k (paying 25% down on each).  Then our loan officer said the underwriters rejected them.  She explained they are lower priced homes so they have a hard time selling them in secondary markets.  Now I'm scrambling to try to save these deals.

Any suggestions?

[Kevin Sobilo]

@Ryan Judkins, go to local community banks and credit unions and ask about portfolio loans. Those are loans that lender is making and KEEPING as opposed to a conventional conforming loan that are almost always resold.

The terms may not be exactly what you're used to. Some may be fixed rate but many will be adjustable rate loans. The terms might be as low as 15 years or as many as 30 years. The LTV will probably be 75-80%.

Don't be afraid of adjustable rate loans. Often these small loans are cheap to get. One local lender to me doesn't require a lender's title insurance policy on small loans saving a nice chunk.

Also, since these are portfolio loans you may be able to get loan modifications as your needs change which is cheaper than refinancing. Once 1 year after I took a loan out, rates dropped over 1%. My rate was not scheduled to adjust for 2 more years. For a $200 processing fee, my lender adjusted my rate early and I saved a nice chunk of interest over those next couple years. The lender knew if they didn't do that I would just refinance and perhaps not with them because it made financial sense.