Ive never had a loan before so Im not up to par with the loan aspects. Ive been reading a lot of books I have a degree in real estate and finance so I understand a lot of the aspects but loans confuse me a little..
I have a 750 credit score and basically ant to go no document because i get paid under the table on a job and just started another. Every loan officer I talk to gives me an opposite of the one before.
there is a house that previously sold for 115 about 4 years ago, its now for sale for 74K, Im going to try and pick it up for 65K but I want the loan for about 85K.I intend to rehab and land contract it for a year or 2 until they have credit for their own loan.
1. Is this generally possible on a loan on a after repairs basis?
2. Would this generally be a 80-20 loan
3. Could I refinance down to a single loan after repairs since ill have more than 20% equity?
4. Do I have to hold a loan a certain period of time to refinance?
5. Do most all lenders charge a fee for paying off a loan early?
Thanks for all advice in advance
In answer to your questions:
1) Generally on a deal like that you need to have the
money for the 20% down, and use that to fix the
place. You've already found this place, but for the next
one, be looking for a deal where the fixing up is limited
to painting and cleaning.
3) Yes. Although you should try to have the 20% in the first place.
4) Depends on how the loan was written. Negotiate that when you
are taking out the loan.
5) Not all lenders charge a fee. It really varies from lender to lender.
*Commercial* Here is where a loan broker earns her or his money. Put
a residential broker to work for you looking for the kind of loan you
want. Yes, there is a loan origination fee, but think about this: there is
a loan origination fee even if you waltz yourself into a bank and talk to
the loan officer there. And they don't do anything but sit there
and look at you!
To add on to Wesleys comments.
Your questions are good, but somewhat too vague to give you concrete answers.
First off, 100%+ loans on rehabs are possible. We actually do them quite often, but the factors have to work out just right. We can sometimes lend on the appraised value versus the purchase price which can get you some money to do rehab.
You don't need 20% to bring into the deal, but obviously the more you bring the lower your rate. Right now, we can do 100% non owner occupied loans for your credit score, but this may only get you 100% of the purchase price in some cases.
The best thing, as Wesley said, is to come into the deal with some cash. Rather than using your own cash, find a partner or private investor to front the money. That is the best way to do it and you won't have your own money tied up.
To answer question #4: no, but it depends on the loan that you get. There are loans that you can refinance the very next day and there are some that require you to pay a pre-pay fee if you finance before a certain period of time. It really depends on the type of loan you get. Keep in mind, buying out a pre-pay will increase your interest rate as well.
The loan you are talking about will not be the 6.5% that you see on tv. It will be a point or two higher if you are looking for 90%-100%+ financing, no prepay, etc., but it can be done.....depending on the specifics.
let me know if you have any questions.
appreciate the replies guys.. Basically the house was appraised for property taxes at 106,000. I think I can pick it up for around 65K. So I thought that it would be possible to get a 100% loan on about 85-88,000 for the rehab and have it rented out in about 2 months. This would give me enough to cover the mortgage for a month, taxes and the rehab. The property doesnt seem to need all that much work but I ownt know until its fully inspected.
appraisals for taxes are not what you go by. You need an
actual appraisal that will do the comps on it.
Tax appraisals can come in significantly low.
I know they are generally low, thats why I like the possible deal. I had comps run and they came in around 120,000. The deal if I have a loan of 88 lets me make 200 dollars positive cash flow after taxes insurance and the mortgage. I just wanted to try and do my first investment with no partners and no out of pocket if I could and this house seems to be one that would get me to my goal.
Sounds to me like you're well on your way.