I have found a home that is in need of repairs sellers what to sell ASAP. Asking price is 115k appraisal is about 135k ARV should be around 235k my question is can I put a deal together as follows:
Finance 135k
give seller full asking price of 115k
use the 20k left for holding and rehab (if finance company is aware what the money is for)
this will still leave about 100k in equity
All reponds welcome
you could do a “one time close” contruction loan with a lender like national city mortgage and they will finance the repairs.
you must have a-paper credit though
The type of deal your looking for is a Rehab purchase loan where our lender will allow you to purchase the property and utilize the equity to establish an escrow account and offer draws towards your rehab/renovation project. You’ll need 10%-20% down on this type of project and a min score of 610 to get this done.
Since the property already exists, you will not be acquiring a construction loan. You will be in need of either a 203k FHA Renovation loan, a Fannie Mae Homestyle loan, or a renovation/rehab loan through another outfit. These will allow you to a project period where the lender offers draws to your general contractor/builder in order to complete the project.
Between each phase ( usually 4-8) of the project their will be an inspection provided by the qualifying appraiser who has originally been approved and accepted by the lender. The appraiser will need a cost breakdown at the beginning of the deal so as to offer a sound estimate after completed renovation.
Make sure you have all your "t"s crossed and your "i"s dotted as you do not want to deal with amateurs in this field of lending.
won’t a one time close do the same thing with no money down?
they loan up to 95% of future fixed-up value
Hey Islander,
Redline is correct about National City, the do offer a “one time close” which is the same program that Lendinghand detailed. Owner Occupied purchases can be done with 5% down and investment with 10%. Wells Fargo offers this same thing.
Now for the good news. There are several conventional rehab loans that can be done using the instant equity as your down payment. You could get 100% of the purchase + fix and have nothing to put down if you qualify.
These conventional loans could take up to 3-5 weeks to complete as there are 2 review processes. One for credit quality and the other is for construction.
If you are needing to secure funds very quickly or with limited documentation and guidelines then a hard money loan would work. These loans are structured similar to conventional rehab loans but the rates and costs are higher.
what kind of rates and points are involved with something like that?
that sounds like a very interesting product, how does it change when its for a non owner occupied property?
This would actually be my first investment property. Being that it would be a NOO can it still be done.
First time home owners/investors can be financed. It will depend upon your credit, income, and assets.
You can do National City or as PLAN A or B you can do a seller paid grant to a LLC and use any mortgage company you want as long so the mortagage company alows Grants
can you explain the grant method?
Do I have to have an LLC set up or can I Buy at 115k and then do a refi the following day to pull the equity out? what other options are available?
If your credit score is suitable for the programs and the property is in average condition without work being completed, then yes.
Taking cash out immediately after purchase could be possible. The actual appraised value would be used. Your appraiser must comment to the fact that the property was purchased below market value.
You’ll need to find a mortgage consultant that knows the ins and outs of these lenders.
What is suitable credit I believe mine is 680 or so, as for the condition of the house it is liveable as is.
680 should work. Other factors would be income and assets. There are many programs available such as stated, no ratio, and no doc if needed.
I think this is how I would structur the deal
(realitor called and said they will take 102k, better for me)
Offer 102k
borrow 102k
do a refinance of only 200k (thus giving new buyer instant equity)
200k minus 102k = 98k
98k minus holding costs of 30k (for a year) = 68k
68k minus repairs of 35k = 33k
33k = profit
Going to make offer TODAY on my first deal. 8)
So are you looking for 100% financing on a purchase contract and then going to refinance afterwards?
yes, See I have no money to do repairs, thus a hard money loan would not work. this property has enough equity in it I think it would be best to do a 100% stated loan and then immidiatley refinance to pull the equity out, to do the repairs. Are there any other options that I could do?
Thanks
Just got a call from a lender who said he could finance this deal for me. TERMS:
Option 1-80/20 Payments would be 833
Option 2-100 Payments would be 928
Hummmmm I would choose Option 1
But if I was going to do a 100% loan y not do an intrest only loan and then a home equity line of credit, for the repairs and holding costs?
Need help DON’T KNOW WHAT TO DO! ???
First off, did he look at your credit. If not, then make sure this is done quickly. Your score alone is not the important factor on the report.
Without seeing this you may be getting quoted something not available.
All things considered, if he everything works out for best terms your payment could be about $100 less. Split up into a 1st/2nd combo. Int. only on the 1st. After closing just refinance and payoff the 2nd with additional cash out.
Good Morning, just got home from looking at 3 more properties, and have a question . My realitor that I’m working with, said something to the effect that on an 80/20 loan I can get a bid from a plumber and an electrician and ask for that money say 10k each to be due back to me from the loan for repairs. Is that really possable?