Should I Be Doing This Or Am I Crazy For Doing This?
Hello from Phoenix, AZ. I currently own my home which is paid for free and clear. I estimate it worth @ $250,000. I would like to invest. I can not get new loan on inv. propty due to having no doc www.situation.e.g. self empl., no proof of income, but can on my free and clear home. I hate having to get loan on my own home, but I can get $150,000 CO, with $ll32.96 PITI monthly, $2500 closing fees, 5 disc. pts, 10,000 back aft. 1 yr and 10,000 ded. on taxes. Full loan is 163,725 @ 6.5% fixed. Looking to find fairly low rehab FSBO to resell. This is my 1st exp. in REI. Any replys, please? 
I would suggest that you at this stage of history not encumber your house it may become a refuge if there is a change in the economy. You should be able to do a normal construction borrowing if you wish to do a rehab or even a full erection of a new house or apartment house. I think you need just a little guidance in that area.
Disclose your financial position. Job, income, married not married children running expenses just what you really want to do. Etc. Let me know and with that done get to work.
Lucius
Thank you for the reply, Lucius. I am married, but my home is in my name only. Ray is husband by paper only and roommate only and would be included on loan but quitclaim deed at time of closing. I have grown children, self supporting. Have income from selling antiques and coll. to private buyers. Also selling on e-bay but do not have stateable income. Ray pays utilities, food, etc. I would like to buy fixer-upper single family homes to re-sell. I would pay mtg from the borrowed amount until sold, then bank profit (if any, I hope) and cont. to pay on mtg until I can pay it off. Mtg does have early pay-off penalties. I have copy of paper work if you would like me to e-mail fax or whatever for you to look at. I have signed nothing so far. Also, have correction. This is ARM not fixed. Thanx.
I am not sure if this is already part of your strategy but maybe you could buy seller financed fixer-uppers, open up some type of equity line against your current house ( should be a much smaller amount than your previously mentioned loan ) and use your equity line to fix up the property. I am not even sure if you can get an equity line with a non-verifiable income. If you cannot, then maybe seek money from private investors ( you should be able to avoid the closing costs associated with conventional lending ) Just a few more thoughts!!
Have you considered hard money lenders? Just make sure you go in with a 3 way plan to get out of the home after rehabing the home.
I agree with Lucius, the economy is a very fragile thing. Having lived through the great depression and personally witnessing many economic changes gives him the authority to speak on the matter. I would consider using hard money lenders rather than hocking the family home.
OK here's my 2 cents - I have a hard time believing you are getting the best deal possible on your refi.
How long have you been doing the antiques/ebay sales? With a $250k asset that you won;t default on, I would think your terms for a 60% LTV should be 1 point, MAX 7% fixed, about 1.5% closing costs (about 2250). DO not put your home at risk for a bad refi opportunity. It''s just not worth it.
Now for your "resell" plan. I assume you believe you either know of, or believe you can locate someone who is less familiar than you with selling a home - that is great.
Consider following the Sub 2 forum, the bird-fogging forum, and find out about buying options on homes.
THese do not require any where near as much case as an outright purchase and have some limitations; however you can come very close to the upside that you receive with the outright purchase without anywhere near the expense.
Hope this helps.
Wow! I am overwhelmed with the response to my dilema! Thank you all so much for responding. I love this place! I am still waiting another reply from veteran Lucius. Hope you're still out there. I will hold off on this as long as I can. The water is almost up to my chin, though, so I have to sink or swim soon. This must be sort of an unusual situation. Do you think if I put this under a different heading, (instead of Legal) there might be someone that has been in my situation before who can help, too? Once again, my thanks to you all for the advice. Jinjer