I have a small property management business, and I wanted to buy 2 apartments, however, I wanted to see if there is any way using my charge card (unlimited spending) for the down payment and closing costs. Is there a way to charge my business with the card to help purchase the apartment? How? Do I need to have some sort of PayPal account setup? Any thoughts, or recommendation would be greatly appreciated.
The 1003 has a direct question that says “is any of the down payment borrowered”. By checking yes you will have an issue with financing and by checking no you will be committing mortgage fraud. Not to mention that the down payment and closing costs will have to be seasoned unless you go stated/stated or no doc. Also, typically the interest rate on cash from a credit card is ridiculously high. Way higher than what you would pay on a second mortgage. Also, the amortization is set-up differently so the payments could be higher.
christoper w makes some good points. To me cash flow is all that matters, so if you pull money out a credit card and the property still cash flows, then who cares. You can always refy in a year, and just pay off that credit card.
Worst case senaro is that you pull the money out of the credit cards a few months months before you close. Then the seasoning requirements will not be a problem because they won’t show a deposit on your last two bank stmts. Or you could just do a No Doc loan which will only require a verification of assets and not a stmt. Then refy in a year or so for a better rate.
If this is a great deal, then there are definitely some options. This is a minor problem, nothing that can’t be worked out.
This raises a question (one that I haven’t thought of before).
If I use my HELOC (which I have before) that has to fall into the catagory of mortgage fraud…I have used my HELOC for the downpayment and financing for several rehabs; paying it back after the construction is done and an end-mortgage is in place.
I believe it would depend on the lender and the loan application. On a conventional 1003 application it matters, but if you are doing small rehab loans the lender may not care how you come up with the down payment as long as they don’t lend you more than their LTV guidelines allow. But as you posted you are refinancing ang putting an end loan in place.
I use a business card, doesn’t report to personal credit(VERY IMPORTANT!!). Amex has given me a 91K balance transfer into my checking account not long ago (also seperate from personal) then I buy rentals. Here I can pick up a good rental around 50-70K that cashflows well. Then do a no cost refi a few months down the road. Amex has a few cards that offer 4.99% for the life of the balance. Payments are computed I think 1/50 of the balance plus interest. Just apply for lots of business cards, then if you have great credit like I do, they will give them to you all day long, then realocate those lines onto the one card that will give you a 4.99%BT. YOu can do all of this on their website. For more info go over to fatwallets.com
When you apply for these business credit cards don’t they ask you what the annual volume of your business is? What if you don’t have any volume? Do the cards you have allow you to pay
in monthly installments?
They ask but don’t verify. You sign personally, unless you have a long estiblished business with a great score. The best thing is when you go to refi, and the bank pulls your credit, nothing shows up. Beware of an F/R though. Be ready to prove everything. Like I said, study up at fatwallets.com