I've got a house under contract for under 100k and just found out that i can't get a conventional loan under that, so i'd have to use a FHA loan. I was planning on fixing the house up with my own money and then renting it, but i really don't want to be stuck living there for 2 years with FHA.. If i were to find a portfolio lender would they be able to help in this situation? My other idea was to try for the Homestyle loan at 100k to qualify for conventional financing and have the money to repair, but i dont know how easy that process is. Please message me or comment with any helpful information, as this is my first purchase, so i'm new to this all.
Yes, a hard money lender may be what you need here but this is a more expensive alternative. Because of the cost, HM is better for short term financing (let's say 6 months).
Some have longer repayment terms. No prepayment penalty is something you need to make sure of.
Now, remember that most HML do 65/70% of ARV. So, if you're paying $90k, your ARV needs to be $140k or better.
May I ask the reason why you can't get a Conventional loan? If it's due to "loan size" I can help as we do smaller loans than most banks/lenders out there. If the property needs a lot of work you may want to investigate a Conventional Renovation loan but if it's in good shape we may be able to help.
Please PM me if you want to talk further.
Alec,i may be able to help with your loan request, please email details on your request
You could try and contact lenders that are not quite HM - but not a bank with strict lending rules. For example- I have contacted Colony American Finance (from their ads I see on my Facebook pages). Turns out - they lend either 70% ARV and you provide the repair costs or 80% of total costs ( no ARV calculated I believe). They mentioned to me they charge 2 points, and 9.95% interest - but prefer longer term financing. Maybe they can work something out with you. The other ad I see these days is Flip For Funding. Don't know much about them, other than their marketing of unsecured financing and I have left a message with them twice to call me ( they keep sending me e-mails instead - which makes me a bit suspicious of their operation). Either way- it's worth a few phone calls. I would use hard money as an extreme last resort - due to their 4-5 points and 15%+ interest.
You'll need a conventional alternative as hard money lenders will not lend on an owner occupied property. Some bank lenders will do smaller loan sizes under $50k, but not may.
Look for a branch of Movement Mortgage -- they're expanding rapidly in Atlanta and do all kinds of mortgages, including some that they fund in-house.
The kicker with the lower purchase prices is that the loan amount to closing cost ratio is too high (or the other way around, whichever), and that's become illegal (a response to the predatory lending practices before the crash). If you end up needing to borrow less than $50k (after putting in your downpayment percentage), and the closing costs are around $3.5-$4k, you're getting close to 10% and that's too high. The part of the closing costs that goes to the lender is really where they make the money, so they won't/can't lower that.
We have been working in the Atlanta area for many years.
Best of luck in all your endeavors
I recently refinanced a place through Fidelity Bank out of Gwinnett. Jeff Zuloff(spelling?) was the mortgage person and mentioned he could do smaller loans during our conversations. He said down to 40k.
@Alec Anderson I am in Atlanta and in the same situation. What is the best number to reach you at? I think we could help each other out.
@Troy Durrette -- I am in process of a "cash-out" refi with Movement Mortgage, and checked them out before moving forward. There's a positive profile on Bloomberg, and other positive info. The guy I'm working with was hired away from Wells Fargo. I haven't really seen much negative info at all.
Thanks @Anna Watkins when all works out, shoot me a line letting me know how things worked out. I'll make a decision this week.
I've contacted a few other lenders in the past 24 hours and have come to the conclusion that the person who told me you can't get conventional under 100k probably said that because he thought it would be a waste of time for him, because a few other lenders said they can do it.
Most conventional lenders won't do loans under $100k because it's not worth their time.
We refinanced our rental ($55k loan) a few months back and the (now previous) mortgage company wouldn't even entertain the idea. I spoke with a buddy of mine who is a mortgage broker and he said what I stated above. He ended up doing the refi for us because we had just purchased our new home through him back in April and he knows I'll be sending more deals his way in the future.
It's not true at all that big banks won't do loans under $100k. I do them all the time, one recently for less than $60k. You just need to find an originator who values the relationship and doesn't judge you based on the deal.
I looked up national lenders b2r, colony, Visio, for 75ltv 30 yr amortization. The terms and rates differ but it's not that great with 6.5 percent for a few points.