Buy with cash then take out conventional mortgage

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Buy with cash then take out conventional mortgage

Jack Zuchars
Real Estate Investor · Brooklyn, NY · Member since 2011 · 21 posts · 0 votes

It has been probably discussed before but I can't seem to find a good thread.

Since sellers like cash, I'm thinking of pooling my own and my friends' reserves and make cash offer. If accepted (and after closing), can I apply for a conventional mortgage ? Is it even possible? Or I'm stuck with taking out an HELOC? How soon can I apply for a mortgage?

Anyone has any advise on how to write up the loan agreement with my friends? They'll need the loan secured by the home, right? Will that create a problem with conventional mortgage with the bank?

thanks

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  • Chris ClothierBusiness Member
    Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
    14y

    Jack -

    Yes is can be done and you'll find more success using smaller local banks than you will with national banks. I would suggest getting pre-approved with a lender before purchasing so you have all your answers before buying. PM me and I can give a couple of lenders that work on very short seasoning periods for qualified buyers. Usually you can get refinanced in 90-180 days depending on the lender and the strength of the borrower.

    As far as structuring the title, that is something you want to get the advice from your lender and CPA before preparing any docs defining ownership. You do not want to slow down the process because the lender down not want to refinance the property based on how the title reads. By pooling money you are opening up all kinds of obstacles, but certainly none that cannot be overcome if everything is clearly defined on the front end.

    I would search for a thread on partnerships and seek some advice from people on here who purchase properties in partnership with others and see how they do things.

    best of luck

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  • Jeff S.
    Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
    14y

    If you have other property you could secure the loan with a note and trust deed. Not sure in your state but possible a title co could prepare for a nominal fee.

    If you don't have something else then it would have to be a loan on the property you are buying. The escrow closer should be able to prepare the docs.

    You can also do a partnership but that is too complicated IMO.

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  • Jack Zuchars
    OP
    Real Estate Investor · Brooklyn, NY · Member since 2011 · 21 posts · 0 votes
    14y

    Chris, thanks. Could you please forward the lenders' names you mentioned in your reply.

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