Under market value purchase

[Indra H.]

Hello folks,

So this will be my first time using non conventional loan. I have a house under contract, house is valued at 150k but i was able to get it under contract at 109k. Now, my initial thought was to do 20% down of the 109k and finance the other $87,200, my question is if i could do the numbers for the appraised value instead, 150k price and take a loan for the 112,500k which will be the 75% of purchase price and hopefully only pay for closing costs. I understand this might super simple for some, but ive always used the conventional way, which is no longer a possibility. Im looking for a fixed 30 year. Any thoughts? Thank you

[Aseel Yerunkar]

Couple questions..

1. Are you planning on making improvements to the house?

2. What is going to be your exit strategy to get out of what I am assuming is a high interest hard money loan? Sell? Refi?

The only way you will get a loan based on 150k (ARV) price is if you get a hard money loan. And the only way they will give you that loan is if you have plans to make improvements that will raise the houses value to the ARV. Maybe there's options where they will give you a loan based on 150k ARV without any improvements made to the property, but I personally have never heard of something like this happening. Maybe someone else can chime in here.

If you are saying that the houses value is 150k AS IS and you are acquiring it for 109k, then I think your best option would be to get a 30 year commercial fixed rate loan since you said conventional is not an option, and then open a HELOC to attempt you to use the equity that you claim to have because of your below market value purchase price.