How To Structure The Financing( Not Lender Fishing)
I'm trying to finance a HuD foreclosure that I will have to hold on to (lease out) for a year. I have bid $89,700. and can put down 30% ($26,910) to purchase it. Its real value is 140-150k.
So far my loan office can only recommend going through World Savings at 70/30 financing because I have a 620 credit score and I am not working. The only upside is I would secure a 4.5% interest only payment. My payments would be in region of $300-400 per month. Property could rent for $1200-1400.
The things is, I do not want to tie up so much capital for a whole year. I would need some of it to short sale for raising capital.
Also:
Despite the property being able to appraise for upwards of $133,000 and the purchase price is $89,700 my lender tells me that is irrelevant. The LTV would be 30% of purchase price which is $89,700.
Do I really need to put 30% down for a no stated income loan. He mentioned IndyMac may do a 80/20 no doc but I would need a 680 credit score, I have a 620.
AND......not to lender fish!!!
Can anyone give me another creative way to finance this deal. Please do not provide LENDERS' names, just methods in which to proceed.
Sounds like you have credit issues that are kicking you a little.
I would suggest checking TCI's lender area at: http://www.thecreativeinvestor.com/LenderFinder-index.html
[addsig]
I would recommend doing whatever you have to do to get the property initially, andthen turn around an do a cash-out refi that doesn't have seasoning. You don't have to tie the money up for a year. However, when you refi you may have to address some income issues. The lender may want proof of whatever it is you do to gain income.
*Board Hustler*[ Edited by JohnLocke on Date 09/28/2004 ]
620 and no job? You are stuck with a "no doc" loan. Put the 30% on it and get it now! According to your numbers, you will have a net profit of $800 by renting it. After 1 year, sell it and you make another $60,000?
Stop trying to squeeze and extra $1.00 out of financing.
As for himam's idea of listing it as owner-occupied, but renting it out - that is called FRAUD.
I agree with cornerdave 620 FICO, no job ,no doc and NOO yes that is 30% down. But hey you are getting a good rate.
As for doing a refi soon after closing, sorry that is still not going to help. Perhaps after 6 months but not right now.
It might be obvious but just in case...
The ideas presented are good given the circumstances. You have a good deal given the purchase price vs. value. Well done on that score.
If you really want to improve the picture, get a job. It might not even need to be much of a job. Just something that shows income at a reasonable level. Expect that how long you have been in the job will matter and if you stick to the same field as prior work that helps. Ask a mortgage broker about how you loan options would change with job X vs. job Y to see where the sweet spot is in the curve.
Otherwise assume that your credit and your income are a negative for conventional financing. 30% down will be normal in this case. Or, look at deals where you do not need conventional financing (Subject-to, selling quickly deals like this one so you are in and out, etc).
You could consider a partner who has the credit and income so that you can get better financing. Even with a partner you will generally find that you are limited to the sale price on a purchase and (for some lenders) on refinancing without seasoning.
As someone else noted, trying to squeeze this one is likely a lot less productive then just finding the next one.
John
[addsig]
Quote:
On 2004-09-26 22:08, honii wrote:
I would recommend doing whatever you have to do to get the property initially, andthen turn around an do a cash-out refi that doesn't have seasoning. You don't have to tie the money up for a year. However, when you refi you may have to address some income issues. The lender may want proof of whatever it is you do to gain income.
The lender will want to know with your scores being so low