Is your local bank lending to value?

[Bret Bordwell]

Every bank I have asked, will only make loans based on purchase price. So, it doesn't matter how great a deal I find, I still need 20% of the purchase price. (plus closing and fees, etc.)

My question is... Am I not asking the right bank, or are there banks that will make LTV loans?
I know I can go hard money, but if my goal is to buy and hold, it doesn't make sense.

Looking forward to many replies.

[David Beard]

The issue is that banks have suffered catastrophic losses by letting folks borrow 90-100% on trumped up appraisals during the 2002-2007 period. Banks are rightfully suspicious of appraised values, especially in a still downward-trending market where foreclosures are running strong, and particularly when huge amounts of equity appear to have been created out of thin air on a deal. They are even more suspicious of borrowers who won't make a reasonable investment in a property, as that borrower has little incentive to try and preserve the property at all costs.

This is the reality, and there is no circumvention of it. Banks are applying what they've learned from the meltdown. They're still doing lots of stupid things, but I don't think this is one of them. If I ran a bank, I'd want skin in the game. Most HM lenders even want this.

Most banks want to see at least 6 mths of title seasoning, many 12 mths.

All that said, at least a couple of members on here have stated that they can do cash out refinances immediately after rehab, with local banks, using appraised value. These are exceedingly rare, but maybe if you call every bank in your area, you'll get lucky.

Good luck.