Thanks for replying, I will clarify. I did mean cash out. I want to buy a home in the 20-30k range with and improved value of about double that. How would I cash out on the first mortgage for 20-30k? Thanks!!!
Assuming you're intending to keep the house as a rental, all you have to do is a refinance. Going above 80% of ARV, I don't think is a good thing. For one thing, you've got PMI to contend with, and for the other, you're taking all your equity out, leaving nothing for the future. Just about ANY Mortgage broker can do a refinance for you, or, well, ok, I'd say ALL of them can... Oh, and you gotta watch your DTI's, and if you do this too frequently, with different lenders they'll start pulling your credit, and your FICO score'll go down, so there's a couple of things to watch out for there.
There are not many lenders that will finance loans under $30-40,000 unless you were looking at using a local bank. Many lenders will reserve the best interest rates for loans above $100k but it doesn't sound like that is your primarly concern. Refinancing and cashing out that much shouldn't be too difficult after 12-24 months. Usually conforming lenders have 3-6 months seasoning and non-comforming lenders allow cashout refinancing immediately following purchase assuming the increase in value is valid.
Are you asking if you can finance more than the sales price of 30K?
For example, the fair market (fixed up) value is 60K and you can get the house for 30K. SO you want to get a mortgage for 60K and keep the remaining 30K...right?
No, it's not difficult. Buy a house for 30k, put 10k in it fixing it up/holding costs, refinance 80% of 60k, put 8k in your pocket. In these low end houses, you're not going to be able to pull much out, but you can get enough to move on to the next one, leaving a trail of nice little rentals behind you, giving you a little money each month, while paying for themselves.
Everybody makes it look so easy, ... but ??
1. On the 30K you will have pmi unless you put down 6K.
2.You will have closing costs!
3. Now, you need money or credit to fix up and to carry.
4. So now you have the bills from using credit.
5. You go to refinance and your scores are lower from using credit.
6. You have more closing costs!
7. The lender will see all of that debt and can you qualify?
8. IF you have a tenant now, they will use 75% rent so at best you break even DTI.
**So, what am I missing in this not seeming or being so simple?
Quote:
On 2005-01-03 14:35, jam200 wrote:
No, it's not difficult. Buy a house for 30k, put 10k in it fixing it up/holding costs, refinance 80% of 60k, put 8k in your pocket. In these low end houses, you're not going to be able to pull much out, but you can get enough to move on to the next one, leaving a trail of nice little rentals behind you, giving you a little money each month, while paying for themselves.
?
anyone?
You may want to re-phrase your question.
Do you mean 'cash out'?
And what are your deal points..are you buying a run-down home for 50K and flipping it? Are you improving the property?
Your original question is vague and a bit confusing...try again and maybe someone can help.
WG
Thanks for replying, I will clarify. I did mean cash out. I want to buy a home in the 20-30k range with and improved value of about double that. How would I cash out on the first mortgage for 20-30k? Thanks!!!
Assuming you're intending to keep the house as a rental, all you have to do is a refinance. Going above 80% of ARV, I don't think is a good thing. For one thing, you've got PMI to contend with, and for the other, you're taking all your equity out, leaving nothing for the future. Just about ANY Mortgage broker can do a refinance for you, or, well, ok, I'd say ALL of them can... Oh, and you gotta watch your DTI's, and if you do this too frequently, with different lenders they'll start pulling your credit, and your FICO score'll go down, so there's a couple of things to watch out for there.
There are not many lenders that will finance loans under $30-40,000 unless you were looking at using a local bank. Many lenders will reserve the best interest rates for loans above $100k but it doesn't sound like that is your primarly concern. Refinancing and cashing out that much shouldn't be too difficult after 12-24 months. Usually conforming lenders have 3-6 months seasoning and non-comforming lenders allow cashout refinancing immediately following purchase assuming the increase in value is valid.
Brandon:
Are you asking if you can finance more than the sales price of 30K?
For example, the fair market (fixed up) value is 60K and you can get the house for 30K. SO you want to get a mortgage for 60K and keep the remaining 30K...right?
-WG
Exactly! Something along those lines!
I tried this once and my banker and a mortgage broker said they will only finance based on the lessor of the appraised value or purchase price.
You may find a lender that will do this but I am sure you will pay through the nose.
No, it's not difficult. Buy a house for 30k, put 10k in it fixing it up/holding costs, refinance 80% of 60k, put 8k in your pocket. In these low end houses, you're not going to be able to pull much out, but you can get enough to move on to the next one, leaving a trail of nice little rentals behind you, giving you a little money each month, while paying for themselves.
Everybody makes it look so easy, ... but ??
1. On the 30K you will have pmi unless you put down 6K.
2.You will have closing costs!
3. Now, you need money or credit to fix up and to carry.
4. So now you have the bills from using credit.
5. You go to refinance and your scores are lower from using credit.
6. You have more closing costs!
7. The lender will see all of that debt and can you qualify?
8. IF you have a tenant now, they will use 75% rent so at best you break even DTI.
**So, what am I missing in this not seeming or being so simple?
Quote:
On 2005-01-03 14:35, jam200 wrote:
No, it's not difficult. Buy a house for 30k, put 10k in it fixing it up/holding costs, refinance 80% of 60k, put 8k in your pocket. In these low end houses, you're not going to be able to pull much out, but you can get enough to move on to the next one, leaving a trail of nice little rentals behind you, giving you a little money each month, while paying for themselves.