Issue getting a mortgage due to low dollar amount
Couldn't find a similar discussion.
I recently started working on getting my first investment property in the Pensacola, FL area. I have enough cash to put 25% down on a smaller property (30-60K) plus this seems to be where the numbers work best for cash flow in the area I'm interested in. I am not planning on doing any major rehab due to being a long-distance investor.
I called national lenders to try and get a traditional 30 year mortgage but was told that, due to federal regulations on fees relative to amount of loan, they couldn't offer a 30 year mortgage less than about 100K and only 15 year mortgages between 50-100K. The loan officers consistently explained that because the dollar amount was so small the fees end up exceeding a certain percentage of the loan... that makes it illegal to write the loan.
Has anyone run into this? is there a way to get a traditional mortgage? Maybe from a local lender? Any suggestions?
I have no equity in other properties or cash on hand in non-retirement accounts that would allow for a cash purchase.
I have considered a personal loan with a follow-on refi and peer to peer, but I'm a newbie and would rather finance the first deal traditionally if I can.
I look forward to hearing your comments/suggestions.
Steve
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You should use Google Maps to locate banks/credit unions within a few miles of your property, especially if they are small, nationally unknown banks. They would definitely be more willing to underwrite a small mortgage given the property is in their backyard.
I did this for property in Pittsburg while I was living in California.