Pay Cash, Then Refi. To Get $ Out? Possible?
Ok, I have my eye on a single family that I'm going to convert to a duplex.
I can probably get it for 35k cash.
My idea is to offer 35k cash so I can get it cheaply and quickly. I'd close on it; then I'd finance it the next day for 55k. The area comps are 40 to 80. This one would easily appraise at 65. We have the duplex next door which appraised at 75.
My question is, could I finance it the next day, or do I have to "season" the property for six months eventhough there's no current mortgage on it? The seller paid it off some time ago.
Thanks,
OnTheWater
Most banks I have dealt with require at least 6 months of seasoned title. The best refi I've gotten out of a bank after I paid cash for a property was 80% of my actual purchase price. Of course, if you buy it for $35K and put 20K worth of work into it, then the bank takes that into account.
I would be very interested in knowing the answer too.
I bought a house for $110k in October paying cash. I would like to get cash out of it.
If the house is considered a second home for you what about a HELOC loan?
Might be worth at least calling a couple banks and mortgage brokersto find out.
OnTheWater - I talked to 5 mortgage brokers about a similar scenario less than a month ago. I got 5 different answers all the way from NO WAY, NO HOW you will have to wait 1 year - to NO PROBLEM I CAN DO IT TOMORROW.
Made me very uneasy to say the least. I know one thing for sure your interst rate is going to be higher if there is no seasoning of the loan.
Actually I have a mortgage broker who can do no seasoning at 90%LTV. You must have a credit score of 640, and can do stated income. If you'd like his name and number pm me.
Your main question is to season or not to season. It depends on which loan broker you're using. If you fnance FHA then you have tie 90 day moritorium to contend with. It begins with the deed date. Solution: Don't use FHA. Next, find a loan broker who can get the job done. There are still plenty of lenders which don't require seasoning.
The conversion of a single to a two unit dwelling will require zoning approval.
A
There are banks out there what will do a refinance with no seasoning, however the rate is typically higher and the LTV is
around 80 - 90%. Check around and get
a good faith estimate from a broker.
In terms of converting to a duplex. Check with your city first. Sometimes they require you to have two parking spaces per unit, split the utilities, do a
survey. Big $$$$
Good Luck
Jeffrey Adam
[addsig]
Today at luch I did a refi with Washington Mutual on an investement property I bought last month. Bougth it at 32k, appraised at 65k, refinancing costs TOTAL including prepays were 2k. Walked away with an 11k check. WAMU will do 75% LTV.
By the way - you are converting a SFH to a duplex? Most likely you will not be able to do it legitamately. Most likely, zoning will not allow it and the cost of an additional water and power meter are very high. If you need to pull permits the inspectors might report you if it is not zoned SF. If you do not do it legitimately you will not be able to call it a duplex or multifamily when you resell. Of course you can always do it without the permits or on the sly. But you always run the risk of a neighbor or angry tenant calling you in.
Brenda
Quote:
On 2004-01-22 20:19, The-Rehabinator wrote:
OnTheWater - I talked to 5 mortgage brokers about a similar scenario less than a month ago. I got 5 different answers all the way from NO WAY, NO HOW you will have to wait 1 year - to NO PROBLEM I CAN DO IT TOMORROW.
Made me very uneasy to say the least. I know one thing for sure your interst rate is going to be higher if there is no seasoning of the loan.
I do not understand when you say there was no seasoning of the loan. What loan?
I think this thread might do better on the mortg forum.
I will make a new thread over there, heck we have to have a bunch of mortg brokers on this board.
I have a small local bank that requires NO seasoning. I pay cash for the property and rehab, then get it appraised and they will give me an 80/20 loan. Check the smaller banks in your area, bet you can do the same thing.
The secret is that they hold the loans and do not sell them.
[addsig]
Hey,
This is the way I buy my houses: Cash to the owner, do the fix up, put tenants in it, and then do the refinance.
I have never had a problem with seasoning. I have had problems with the amount of the new mortgage being too small; under $60k and you pay an interest penalty.
The broker or bank you use will determine if it needs seasoning or not based on thier lenders requirements.
Sunre - You stated you have a broker that loans 90% LTV with no seasoning.
Must have score of 640. Is that 640 the low, middle, or high score? Or is it any score of 640?
I have a salaried job with documented income and my credit score is 721. I bought a 6-unit in October with cash. I would like to get the cash out .
Hey, great responses! Thanks much, especially about the zoning.
The reason I think I can convert from single to multi is 'cause ours next door was converted before I bought it; I better check though. I'll call the City right now.
I'll call my mortgage guy next re. the seasoning.
I'll post my answers when I get'em.
Thanks,
OnTheWater
Ah-ha! Here are a few answers.
The property is zoned RM1, so it can be made into a multifamily.
The property assesed for 55k -we'll get it for 35k, convert it, rent it and get a loan to get $ out.
My mort. broker told me that it depends on which provider you go with. Some require seasoning; some don't. Red flags can also be raised if you try to get way over what ya paid for it; being we'll get it well below assesed value and put in about 5k, we should be fine.
We'll that's what I got today.
Thanks,
OnTheWater
Good luck...It can be done with some calling around. I'm in the process of it right now. Be sure to the property appraised for as much as you can. I assume you know a good appraisor who will do his work rather than just low-balling it to what you need rather than working at it to get it for what it is really worth and what you want.
Q