Down Payment
My question is, is there a way to get arountd the 10% or 20% down payment on investment property? I know if you move into it that you don't have to..
I have went to several banks/Mortage companies and they all said that I'd have to have 20%.
So is this standard... If so I need to switch my train of thought to how to get the money....
THanks
If it is not commercial you should be able to get 90-95% financing from good lenders. Talk with investors in your area and see who they are using.
[addsig]
Check out the lenders section of the site. If you have a decent credit score, you could get 100% financing on investment property.
Ray,
You find it worth it to pay pmi and high interest rates to go 90-95?
What do you think of 80/15/5 strategy?
When I said 90-95, I've mostly used 80/15 or 80/10, thereby rightly avoiding PMI. Good point as PMI stinks
[addsig]
DaShow,
What do you consider a 'decent credit score'?
What types of rates/terms do you have for 90-100 NOO? ~~Thx~~
DaShow,
Would also like to know about these lenders. In NC, could not find any lender who would do even %80 LTV with good credit score. No full-time income to verify of course. So having to use my husband's to even have anyone touch a loan for us. He's the one with the full time job, but we both have good credit. Pm me with any insight on this one if need be.
Lynn
PMI stinks. But so does a second mortgage with a shorter term and/or higher rate. Cash flow, cash flow & cash flow is usually the prevailing motive for short-term investors (1 – 5 years). You’ll find that going 30 am on the full boat with PMI will usually increase cash flow vs. a 30 am 1st and 15 or even 20 am 2nd. Besides, you can usually drop PMI for the cost of an appraisal after the first year with an appreciation in value, especially if you purchased a “fixer-upper”. If not, then you probably paid a little too much for the property. But then again, exactly how many short-term investors hold onto their properties for over 12 months.
In addition, you’ll only need PMI for FNMA/FHLMC type of loans. Most all non-conforming institutional investors do not require PMI. Yes, you’ll pay a higher rate and fees, but you’ll usually benefit from a higher ltv, no escrows (equals less cost) and less paperwork (equals faster closings). A higher ltv in turn, increases potential cash flow by maximizing your buying power by utilizing less capital per investment. Remember that FNMA/FHLMC will only go 85% LTV, on 1-2 units and even less on 3-4 units…with PMI of course. Some niche programs through FNMA/FHLMC type investors will go as high as 90% - 95% with PMI and a strong borrower, and certain mainstream b/c lenders can go as high as 100% without PMI, but a higher rate & fees, most under a stand alone 1st mortgage. Last but not least, you can always finance your first “Other” property as a 2nd home, thereby reducing overall cost. Your 2nd home must be a bonafide 2nd home. If you decide to turn it into a rental or flip it, that’s your business. Just don’t buy a 2nd home 15 miles away from your primary residence.
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Allan Beraquit
[ Edited by Allan_FLMortgageBanker on Date 11/26/2004 ]
Im new with this whole 0 down stuff, i did regular financing with the home i bought, what is the purpose of a first and second mortgage on an investment property, how does it really help you?
Bump ~ I too could use some more info.