Neg. Amm. And 1% Mortgs.
I was thinking about refinancing two properties to pull some cash out for more deals. The mortg. broker suggested a neg. amm. or a 1% monthly payment loan to maximize cash flow. Seemed ok until I read another mortg. broker post here that said a neg. amm. loan would start killing my fico once the balance owed became more than the original balance. Has anyone here done either one of these type loans and can testify to how their credit score was affected one way or the other? I now have two mortg. brokers with two different opinions and am looking for confirmation, denial, or a majority opinion.........or proven fact.
Thanks
Larry
Interesting, thanks. Not too concerned about the appreciation. Exit strategy is a CFD on a two year term with appreciation already built in to the selling price. I was just going to get an interest only until the broker mentioned these other two as options.
I have to agree with Nathan14.
Why? Last May I pulled my tri-merge credit scores. The next 5 months I maxed out 6 of 7 credit cards(rehab). In October my score had gone UP 35 points. Why? I think the weight of my 3 mortgages and on-time credit payments helped tremendously. Why else would my score go up so much when all I did was max out my credit card debt?
Larry,
Right now my partner has four 1.25% mortgages. They were taken out in 2003. HIs credit is 798. The kind of loan you will be taken out will not affect your credit. And the balance does not go up on your credit report. Since I did all four loans and monitor his credit occasionally I know what his credit score is. So if you are looking for a great way to create cash flow. TAKE the loan. I suggest that type of loan to all of my investor clients.
Lori
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real estate investor since 1988. I like to find creative solutions for my real estate headaches before they become problems. Most importantly, MOVEMENT DOES NOT EQUAL PRODUCTIVITY[ Edited by tinman1755 on Date 02/08/2005 ]
If you are concerned about the neg amortization, then take the loan and make i/o payments.
Nathan:
Just for kicks (and less headaches), what is the name of the credit union that your referenced? They have a website?
Thanks
msubob:
Email me.
Quote:
On 2005-01-30 21:24, LarryNut wrote:
I was thinking about refinancing two properties to pull some cash out for more deals. The mortg. broker suggested a neg. amm. or a 1% monthly payment loan to maximize cash flow. Seemed ok until I read another mortg. broker post here that said a neg. amm. loan would start killing my fico once the balance owed became more than the original balance. Has anyone here done either one of these type loans and can testify to how their credit score was affected one way or the other? I now have two mortg. brokers with two different opinions and am looking for confirmation, denial, or a majority opinion.........or proven fact.
Thanks
Larry
I work with investors all the time and have used the 1% pay option arm many times. There has not been one of my investors that it has ever hurt their FICO score! I use the LIBOR, COFI, MTA indexes for the 1% rate, it creates the most cash flow for the investor. I keep hearing on this thread about the BAD Neg. Am on the 1%-1.25% Arms, but not one word of the appreciation that will go on no matter what type of loan that you have, the Pay Option Arm can have up to a 15% Neg Arm if carried all the way out. How much appreciation do you think will happen over the course of the life of the loan, (hint , its allot more that 15%) What everybody need to figure out is how long do you want to keep the property and does it make sense to have a Arm loan or a fixed loan. If you are renting out your properties, cash flow is your biggest friend, it will help you qualify for a bigger loan the next time out because it has raised your income thus your DTI.
Good Luck,
Robert
Why do you need to do this??