Hello,
I am buying a home in San Antonio, ($25,000) under market value. I am having a hard time finding anyone who can do a loan at a decent rate. I have a 736 FICO, and no debts. They lenders are quoting me 9.25 for the 1st, and 10.25 for the 2nd. Doing 80/10/10 to leverage. 0 pts.
Any referrals would be appreciated?
Thank you :-*
Jagster,
Click on the link to the left called “Hard Money Lenders”. This is a pretty good list of hard money lenders. It sounds like you’re talking to conventional lenders who will make you pay 10% down, then do a 80% first and 10% second loan. This is typical but with a score like that you can get MUCH better. Keep shopping around. If you are rehabbing then you might need to get a bigger discount then that. Typical Rehabber formula to get hard money loan:
ARV minus 30% minus closing costs/repairs.
ARV = $100,000
30% = $30,000
Closing costs = $6000 (hard money loans typically charge points up front of 6% - 12% or higher)
repairs cost example $5000
YOUR TOP OFFER = $59,000
any rehabber with a hard money lender would easily take this deal. Plenty of meat on the bone for profit and room for error and unforseen events. With a FICO like yours this should be a slam dunk. I hope your $25,000 is $30% below ARV at least.
Thanks for your input. Ok, this property is listed at $127,000 and is 1 year old. All it needs is the carpet cleaned and some walls painted. The developer is building the next phase and that pricing starts at $129,000. Since I am a realtor from CA, I told the agent in TX that I would like to make a lowball offer since it is in foreclosure. Therefore my offer is $90K. It was my idea to do a 80/10/10 to leverage funds. My primary interest is apartment buildings, but this was a deal with built in equity (if I get it for $90,000), a no-brainer so I went for it. I could probably flip this for $119,000 and still beat out the developer’s pricing on the new phase. That’s about $20K profit after buying and selling expenses.
So the lenders are telling me because the loan is UNDER $100,000 there is a hit on pricing, therefore the interest rate goes up. I was just starting to think that TX residential loans were higher. My lender in CA quotes me 6.5 but they don’t do loans in TX.
So now I’m curious, in your posting you mention ARV - what does that stand for? I haven’t yet gone to any bootcamps, so not familiar with that abbreviation.
Thanks, Jag
ARV= After Repair Value
yes on the additional cost on low loan amounts - it is a lender pooling issue (they sell in bulk)
Remember if you are buying property in California we have the “California bump” in rates usually .25 higher b/c we sell or refi more often they the rest of the country…
Most of your banks with lend in all states, some mortgage companies do to…
if you are looking for a rehab lender for your flippers ck out
Jagster,
Judging from what you are saying about the minimal repairs you don’t need a rehab loan. Just ask the seller to put some money into escrow for you to repair the house after closing. If they refuse raise the sales price a bit to cover it. If the home is NOO your rates should be somewhere around 7.375 first 9.5 second.
why would fico matter to a hard money lender?
no one?
… REIman?
Oops sorry. Been busy lately on marketing and webpages.
Your FICO score is always important to anyone giving you a loan. Even a hard money lender in ANY state. 580 score vs 780 score means less to pay up front, more to borrow and lower interest rate.
Go ahead and test this out if you’re looking to borrow money. Tell the lender that you already know you fico score and it’s 650. Then get your friend or someone you know to say the same thing but with a 780 fico score. You’ll hear different rates and up-front fees.
It’s common sense if you think about it. Higher risk people pay more, dependable people pay less. In the loan industry your fico score determines your ability to pay back your loan. In the real estate game as you build your team and you start to build your reputation as a dependable and consistent person who keeps his words you’ll start to get better prices if you negotiate with your team.