Proof Of Funds Required!
This condo that I want to make an offer on is an REO at 47k. They only except offers with 2000 earnest money and certified proof of funds.
I only want to offer maybe 35k, and I don't have that cash laying around. I own a condo worth 120k right now, with a 1st of 10k and a second of 14k. I know I could refinance...but it would be a total waste if I did that and they just rejected my offer, or if during that period of refinancing they sold already.
Any other options here, to get an offer accepted....THEN refinance?
Proof of funds does not have to be evidence of your cash. While a bank account statement or a brokerage account statement showing a balance high enough to complete the purchase would satisfy most lenders' requirement for proof of funds, you can also present a loan pre-approval letter from a lender in addition to your own documentation for the downpayment.
You could also take out a HELOC. That way if you don't need it, you can just hold on to it. No interest charged if you don't use it.
Thanks, that helps out a lot. For getting a pre-approval letter, I most likely wouldn't want to get standard financing. I'd like to refinance my own home to finance some deals like these.
I have a 1st and a home equity loan out already. Can I still get a HELOC? I have about 100k in equity, how high a line of credit could I obtain?
My two cents ....
If your property is worth 120K and you owed 24K out of it, your equity is 96K.
Getting a HELOC, as "Makingaliving" said, with a very low interest, would be for 80% of your equity (76.8K) which is still very good and can be placed as a 3rd. mortgage on the property.
Going even further, the bank could give you (very gladly) a HELOC for 80% of the whole value, not just the equity, with the condition to pay off the 1st & 2nd, and therefore, taking the first place.
With the actual low rates, that could be a good idea, depending on the interest you pay for the 1st. and 2nd. mortgages.
Just an idea
Roger.
I usualy present a simple statement that I have my usual close confident draw. I use him all the time, a Mortgage Broker. He on his stationary states that I have the sum of: Whatever, amount you need. Available on my execution of the proper loan documents. Signs his name and dates it.
I then write out a check for the $2,000 or whatever is required and submit it with my offer..
If the offer is accepted you are home free and you can then adjust to whatever financing you desire. Most of the time the check will be returned and you may wish to tender it into escrow in the form of a Cashiers Check or a check drawn on your investment account or whatever.
Lucius
Find a hard money lender(investor) who would give you a loan? get him to give you a letter stating that if your offer is accepted he will finance the deal for you.Another alternative is get an equity line of credit on your condo(much cheaper).
Isn't this just a refinance then? Or could it work out as a new 1st mortgage + a HELOC? I want to be able to offer a certain amount, but then if the offer is rejected to not be sitting on a pile of cash. As I understand it, with a HELOC if you don't use it then you don't need to pay on it?
Quote:
On 2004-01-24 03:12, Rangui wrote:
Going even further, the bank could give you (very gladly) a HELOC for 80% of the whole value, not just the equity, with the condition to pay off the 1st & 2nd, and therefore, taking the first place.
With the actual low rates, that could be a good idea, depending on the interest you pay for the 1st. and 2nd. mortgages.
Just an idea <IMG SRC="images/forum/smilies/icon_biggrin.gif">
Roger.
"As I understand it, with a HELOC if you don't use it then you don't need to pay on it? "
True.
Quote:
On 2004-01-24 15:32, makingaliving wrote:
"As I understand it, with a HELOC if you don't use it then you don't need to pay on it? "
True.
Technically, you do pay. there's an annual fee even if you don't use it.
Now, forget what I said about the HELOC over the whole value and paying with it your actual 1st and 2nd with it.
1) It won't show in your credit report as a Real Estate loan because it is not an installment, it is a revolving loan on the property.
2) the interest is variable and we know the rates can't go much lower
3) the term is shorter
What about this: Refinance your 1st. & 2nd. with a new 1st if, and only if, the actual rate is lower than the one you're paying now AND you plan to live in the apartment long enough to offset the closing costs with the mortgage savings, while at the same time get a HELOC.
Otherwise, just go with a HELOC as a 3rd. mortgage.
How does it sound?
Roger.
If you have a 401K with that amount vested it should suffice for "documentation" of proof of funds required for purchase. If your offer is accepted then you could decide to refinance etc.
[ Edited by fmmp on Date 01/25/2004 ]