So, I've getting my feet wet in understanding where funds can come from for deals when you yourself have very little liquidity. I went to my local bank and they informed me that they do standard 75% of property Value REI loan, which means I just need to find 25% of w/e deal I'm going for. I will be sticking to the $100k and under in the Hampton Roads area. My question is whether or not it's unheard of to cover all or most of the down payment via credit card, or if that's even possible/legal?
For conventional type mortgages, banks like to see the cash down payment with seasoned funds, funds that you had for at least 6 months to a year, or more.
I had to come up with about $20K down once on a property, a foreclosure. I had $6K in cash and planned to pay the other $14K from my HELOC. The bank asked me where the payment will come from, when I told them it'll be from a HELOC, which at the time was a $120K line, they said no.
Fortunately, at the time, I was also doing REI with my mother in law, my wife had a joint account with her for over 20 years, showed them the account with over $50K in it, and they approved it.
But at the closing, I still paid the $14K from my HELOC. They don't check to see where the checks come from at closings.
@Frank Chin that makes a lot of sense. Need to get the wheels spinning on how I'm going to show seasoned funds. That is, if I go the conventional mortgage route.
Love your story, @Frank Chin ! I think it's a great example and I agree that the bank will likely want to see proof of funds. Credit cards typically don't qualify as proof.
@John J. , some other sources to consider for proof of funds are:
1. Gift from friends or family
2. Any stocks/bonds/CDs/money market funds that can be easily liquidated
3. 401k funds (you can borrow up to 50% or $50k) if you're currently under an employee-sponsored plan
@John J. 75% LTV is low. You should be able to find a better ratio if you shop around.
@John J. ..I am in a similar situation. From this forum I've heard that local banks like Towne, Old Pointe may be friendlier to investors. I am new as well and was wondering how to leverage credit for investments. It seems I will have to get even more creative as I am currently shopping for/vetting hard money lenders in this area as well.
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