Getting A Morgage!! help

Hi, I am trying to start investing in real estate, I have a property that I want to buy, and it already has tenants, the problem is that I don't have the 10% downpayment that so many financial firms require for an investment property, can someone help me out? What do I do?

Also, I am a college student, and I can probably pay like 3 maybe 4 % but no more... And I want to invest with my aunt who currently owns a house.


THANKS SO much !
Alex

Comments(2)

  • ram19th February, 2003

    Assuming your aunt is informed and qualified as to risk, you'll need to unlock her equity in the home via a 2nd or a refi-cashout, depending upon current status (perhaps she owns it outright?)...use those proceeds and you've got the down. However, best to fully analyze the downside to the pending acquisition, including worst-case scenario...you'll want to make certain this is not your last deal...you've got lot of opps ahead...like Warren Buffet says..."treat investing like a ten-punch subway pass, and your challenge is to avoid the majority of the really bad deals (which many investors buy anyway) in life".

  • vguess9910th April, 2003

    Hi Alex,

    Assuming that you've done your homework about the property ( cash flow analysis including mortgage payment, insurance, taxes, water/sewer, prevailing rent, repairs, certificates of compliance, sweat equity for the hard work you need to put in etc...), you can find some mortgage companies willing to finance the house 100% if it is a 1-4 family building.

    What they do is give you 2 separate mortgages ( 80/20). The first one might run around 7% and the 2nd aroud 9.5% or even higher. I know these are really high rates specially these days. Also, these types of mortgages usually have a prepayment penalty for the first 3 years or so. But, it's definitely worth it because you will not use you own money ( you can have the seller pay the closing costs) nor pay a mortgage insurance and you can refinance later using a conventional mortgage and lower rate.

    If you've never own a house, an FHA loan might be the best deal or your state version of the fisrt time home buyer program. The interest rate is very low and you can also get a down payment assistant. In Connecticut for example, CFHA is 5.0% while FHA is 6%.

    Investing in real estate is risky, no doubt! But if you do your home work, you'll come up on top.

    Good luck!

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