small mortgages?

Question

I am looking at a property that is listed at $99,000.  I hope to get it lower than that but I am running into an issue with banks financing a small mortgage like that.  The banks I have worked with in the past won't go below $75,000 on the principle in a conventional mortgage.  I can go with a commercial loan, but it is a 5 year balloon and I would rather not go that route with this one.  What banks deal with small mortgages?  I am in Florence, SC.

Chris Mason · Answer

@Collin Smith, @Jerry Padilla is does smaller loan amounts, traditional residential financing. I believe the theory is that when you grow, you will be loyal for helping you get started.

Michael Noto · Answer

@Collin Smith Why not just do what @Bill Gulley suggested?

I work with a lender that does portfolio loans that are 30 year terms and a reset after 7 years.  They do lend in SC.  If that's an avenue you end up wanting to explore feel free to reach out and I can give you details.

Jared S. · Answer

I agree with @Colleen F., check with smaller banks in your neighborhood. I just found out that a small bank (1 location) in my neighborhood has a $20K minimum on a 30 yr fixed. The trade off is their rates are slightly higher and the property must be located in a certain county, but it still provides me the opportunity to go after lower priced properties. I would also reach out to any credit unions in your area as well.

Bill Gulley · Answer

Pay $100,000 and put down 25% then finance at their minimum of $75,000!

Have the seller pay a thousand in your closing costs! :)

Colleen F. · Answer

A smaller local bank should do this, at least in the past that was the case. One problem is they can't  sell these small mortgages they have to keep them in house.

Randy E. · Answer

@Collin Smith, banks make some (most?) of their profit on interest. The lower the principal of the loan, the lower the net profits to the bank as a result of interest. But the bank still has to do all the same work associated with originating and servicing the loan just as if it were for $200K -- all for less profit. That's why some banks decline to make smaller mortgage loans. Some of the banks I've talked to have mentioned $50K-$60K as their cutoff point. I haven't heard a bank mention $75K being that point, but every bank is different.

If I were you, I'd ask around. I'm sure you'll find one in your area that will provide such a loan.

NOTE: I am not a lender. I am only a small investor. This is only my opinion, not a gold standard approved fact. :-)

If I were you, I'd ask around.  I'm sure you'll find one in your area that will provide such a loan.

NOTE: I am not a lender.  I am only a small investor.  This is only my opinion, not a gold standard approved fact. :-)

Will Chamberlin · Answer

Agreeing with the above comments. I have a few smaller loans with my credit union (one was $44k) and there was never an issue with the amount. 30 year am 15 yr balloon.

Nir Babajani · Answer

I'm curious about it too, it looks like the lenders try to pull you towards bigger 150K properties for their terms to make sense.

anybody had success with smaller mortgages?

small mortgages?

Most Popular Reply