Wht Is My Next Step
I currently live in a four unit dwelling and the landlord has not been around for sometime now, not even to collect his rent. I found out yesterday the property was fiorclose on in April of this year, mortage of $75,000 (bank owned). My husband and I would ike to obtain this property with no money down if possible. Our credit is not too good and we have about $3500 in savings. Do we approach the bank with an offer to assume the current mortage - we are at a lost - some one help
That would be your first step, I would also offer them less than the amount listed. during that same time you will want to look at getting financing from one of the sources here on this site or from your local bank. You should also do a search in the articles section for "Short Sale" it will explain the process in more detail.
Good Luck,
Kyle
As an owner occupied property, it will be easier to qualify for financing. The $3,500 you have is a good start. If your credit is below 680/700 your local bank might say thanks, but no thanks. Local banks are generally more aggressive in lending money to those who do not need it, have a great track record of success or have “a connection”. Do you have any idea of where your credit scores are? You might be able to qualify for 95%LTV funding even 100%LTV, but without knowing where your credit scores are, I can not say. If your credit is not that great you might be able to go “No Credit” but providing a full doc in all other methods. There are allot of ways to make things work. There are programs that do allow for 103%/107% financing with the difference over the purchase price being applied to the non-recurring closing costs. Some programs allow you to put the extra funds in your pre-paid reserve’s account. Another concern would be the closing costs. They will probable be somewhere around $1,800-$3,000.00. An appraisal alone for a 4 unit building might be $600-$800.00. There are also your pre-paid reserves that must be done, this will amount to $1,000-$2,000.00. So basically you see where this is going. The costs are adding up. Be prepared that you might be asked for more money, or will have to work more diligently to qualify for 100%+ owner occupied financing. There are programs that will go higher, but they are based on your credit qualifications. There is potential to make the deal work, I simply do not have all the facts here. You can contact me and I can answer your questions in greater detail if you wish. The interest rates on the high LTV programs are not your most competitive rates, but they will get you the property and won’t sink you. The key is to make sure that you make any and every credit, installment and mortgage payment on time for a year – no questions or excuses. After one year you can refinance and obtain a much more competitive rate and save money immediately. If you do try to refinance “within” 1 year, then you will not get the best rate that you can, if you had waited one year to do so. Additionally, most lenders will use the previous appraisal or sales price to determine the LTV, whichever is less. This means that you won’t get to use any appreciation of the property during this time to lower the LTV and won’t be able to show the income from your Schedule E Income Tax Statement. This is what you report to the government on how much money you made from the year. If you refinance earlier than one year, then some lenders might not you use the income of the property to qualify on the debt to income rations. As you can see there is some homework that needs to be done. At this point in time, I believe there is “some feasibility’ to getting this funded and done, based on meeting some basic Fannie Mae underwriting guidelines.
Respectfully,
Phil ~
Phillip Herrejon
312.375.7132
Why not try and get in touch with your landlord. Maybe you can do a sub2 and get the deed and start making his payments.
So go find this landlord and talk to him. If you cannot find him I doubt the bank will talk to you as you need the owners permission, release of information form, and they have to agree to it. You then fax that over to the bank and then they will release information to you.
So go find your landlord first.
Put that $3,500.00 aside for a minute.
Ok, find a local mortgage broker -tell'em what you want to do, and get that paper work going (if I had depended on banks, I'd not be where I'm at today).
Find out what is owned on that prop.
Find out what all the rents are. Add them together.
Subtract that from the monthly mortgage, insurance costs and put 40% aside. Now, does the number cover the mortgage and put $ in your pocket every month? If yes, you got a property.
Now, getting back to what the bank wants for the property... If what is owed is small, buy it. If there's quite a bit owed , then I'd offer less than they're asking.
Also, determine if the property is REO (real estate owned by the bank) or if it's in preforeclosure; if it's the latter, run to the owner and talk to him about selling it to you on a land contract with 8% on the money for three years. This way the payments are made, he's out of it, and you get a property ( you could go there with $2,500 cash in your pocket -$ talks!).
The above is what I'd do.
Thanks,
OTW
Sorry.
I didn't make it clear to you that the mortgage broker idea and the land contract idea are two separate ideas.
They're two spearate ways to get this property.
Also, go to the Lenders tab on this page, put in your state and see what comes up. Give'em those institutions a call and tell'em what you'd like to do (this is a third option).
Thanks,
OTW