Hello Fellow BP'ers,
I help an opportunity to buy a currently rented home for 30K. It rents for $750 a month, and is in good condition. The current lease is up in Oct 2014. I plan on moving in as my primary residence then ( I currently rent). When applying for a mortgage, is there anyway to get a primary residence/ owner occ rate instead of the investment property rate?
I do not want to commit mortgage fraud, and I do not want to kick the current tenant out until October. Since it will legally be my primary residence in Oct, I thought there might be something I haven't thought of. Any thoughts would be greatly appreciated. Thanks!
I do not have an answer for you my friend, but @Bill Gulley is sure to know!
I hope he replies then! Thanks
Having a lease in place on a property that you are apply for an owner occupy loan will not fly. If you are going to owner occupy you need to move in pretty much after closing. Move the tenant out at closing or find another property.
Thanks for quick response Bill. I appreciate it!
Rich, I concur @Bill Gulley will offer you an answer or get you to someone that can. Is property in NJ? Sandy affected?
Best of luck
Yes Gina it's in NJ, and not effected by Sandy.
I am not sure if it's entirely doable but other members can comment on it.
Is it possible that you do a JV with another investor who could buy it for cash now assuming the numbers make sense and then you buy it later from him after the existing tenant lease completes using an owner occupied conventional loan. You could do the paper work now and even give an ernst money deposit with a closing date of Oct. What you have to calculate is whether going that route is cheaper and relatively hassle free for you compared to getting an investor loan and then converting it to a conventional loan.
Also what is FMV of the property with any comps supporting the value. What are current taxes and is there any repair work required.
You could also look into an angle where the cash investor could get a better price from the seller compared to what you are getting and that could sweeten up the deal a bit.
You said its not Sandy affected so most likely not southern NJ but where is the property. You don't have to be specific to street level but a city name would help generate some interest if you are considering what I suggested above.
Hi Rich, Bill is correct , you'd need to have intentions of moving in much sooner than Oct., 90 days is a stretch, but there is a bigger issue.
A purchase price of 30K means your loan amount will be well below minimum loan amounts, you won't be getting a secondary market owner occupied type loan.
The seller of that property will also have issues trying to sell, he will need a cash buyer unless there is a lender willing to make such a small loan on RE, car loans are more than this one. So he may entertain seller financing.
You need to head to your bank and see if financing is available, being a rental will complicate things, but your purchasing as an owner occupied can most likely justify terminating the lease, with proper notice from the seller.
Actually, I think you need to get to your lender, shop around, be prequalified for a mortgage loan and see what you can afford. You might do much better going with an FHA first time home buyers program, if you have about 3K you could be looking at a 75K home. I don't know your market but I'm sure that would be a much better home giving you a better future investment opportunity. Good luck :)
Thanks for the information @Bill Gulley . I appreciate it. I guess I never thought of there being a minimum loan amount before. I will call a few local banks and find out what there minimums are. Thanks again!
I would look into small community banks or regional banks. These banks can keep loans in house if they choose. Typically these lenders will loan on smaller amounts that the big banks won't and they are also more liberal on their lending standards. They may vary well loan as an owner occupied property if you tell them the situation. It helps to already have relationships when doing these kind of deals. It can't hurt to call a bunch of them and see if any one will work with you. I have had success with similar situations in the past with these types of lenders.
Thanks for the response @Beau Ryan. I appreciate it.
Rich, also call you insurance agent, you'll find the same issues obtaining a homeowner's policy if it's an older small home. :)
Yet another thing I haven't thought of, thanks again @Bill Gulley. Oh yeah, please forgive my ignorance, but how do you get a person's name hyperlinked, or underlined, so they are alerted that I spoke about them so to speak. I see it done all the time, but have not yet figured that out. Thank you.
@Rich Harris hold down the @ key and type the first few letters of their name. At the bottom of the message body their name will appear and you click on it and the "link" is inserted into the body of the message.
Also try credit unions they have lots of money and are often more flexible than even banks. It really helps if you have a standing relationship with them but it's not required.
Thank you @Bill S. I appreciate it. I will give them a try.
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