Rental Property Investor · Dallas, TX · Member since 2021 · 4 posts · 0 votes
I am under contract to purchase a property (primary residence) in Texas. The seller has a conventional Wells Fargo loan that is assumable (yes, I confirmed that it is in fact an assumable conventional loan). The balance on the loan is around $200,000 with a 3.75% interest rate. The gap between that loan balance and the purchase price is roughly $485,000. None of the lenders that I am speaking to are willing to finance the difference since the second loan is subordinate. Are there lenders who would offer a loan in second position to cover the difference (and still make it worth while considering I can get a conventional 30 year fixed for the full purchase price minus 10% down at 5.625%).
If there is a more creative way to get this financed so that I can take advantage of the existing loan at 3.75%, that would be ideal.
Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
3y
@Curt Treece I feel bad that I am just now seeing this. It's been a month and I assume this opportunity has passed. Rates have climbed a great deal since you posted this. Assuming a lender would do what you asked, the rate for the 2nd mortgage would be at least 8.5%...probably more. It would also be hard to get someone to go 90% CLTV on a 2nd. Today's rates are right around 7% for a 30 year fixed. If you calculate what the "blended rate" would be on $200K at 3.75% and $485K at 8.5%, you would get an average "blended rate" of 7.113%. Those, of course, are using assumptions.
$200,000 > 29.2% X 3.75% = 1.095%
$485,000 > 70.8% X 8.5% = 6.018%
$685,000 7.113% blended rate
Based on that, I'm not sure I wouldn't simply do simple FNMA 30-year fixed rate loan and be done with it. I think it would be a lot cleaner. Sorry I didn't see this when it was new.