I am a new investor and have never purchased property. There is property that I want to purchase which is Bank Owned (REO). Do I need to be pre-approved to get a Hard Money Loan?
I have personal history of this property because it was owned by my father. He sold it about 8 years ago. It was well maintained, but unfortunately, the owner lost it to foreclosure/auction. It is available and I want to obtain it. My father passed away 3 years ago and my family lives and have several investments on that street so it is my goal to get this property and keep it in the family. (my dad would be proud of me for doing this).
My question is, since this would be a first investment, is it a good idea to use a Hard Money Lender? My goal is to buy it and rent it for a cash flow. The appraisal value is around $167,000. The bank is looking for around $60K. I live in another state and want to be able to purchase my own house where I live so I don’t want to mess up my chances to get my own property. I would appreciate your opinon and feedback in how to approach this.
Is there a reason if need to do a HML? The advantages of them are that you can get them fast and qualifying is typically based on the property. If you are planning on eventually getting a home of your own, presumably you should be able to qualify through a conventional lendor as well.
I’ve usually seen REO require a pre-qualification letter along with the purchase offer, so if you go with hard money or convential, either way you’ll need to be preapproved. To answer your question though, no you don’t really get any special benefit from a pre-approval from a HML, besides the pre-approval letter.
Frankly, a convential loan is what you want in this situation. It sounds like you want to rent this out and in that case you should be gettting a low fixed rate loan with no points. Hard money is typically 3-5 points and 15%
HM allows you to move fast, but u pay dearly for it, most of the times with high points and high APR, but since it is an REO, go to the agent that has the listing and see about putting in an offer to purchase it contingent on financing. unless the bank has a restriction on that particular property that requires pre-approval to submit a purchase contract, then get it under contract and then go after the $$. i bet that you can get traditional financing on that with little or no problem. this is all saying that nobody has beat you to the punch on it already
“do I need to be pre-approved to get a Hard Money Loan?” – i am not sure how you want this interpreted?? literally, yes u do. u have to be approved to get any loan
Exactly what I plan on doing. This is a personal mission and I strongly believe I’ll be able to get it. Thanks for your advice TonyDiCorpo, I really appreciate it.
Just to make sure I understand, getting a conventional loan for this property would not hurt my chances to get another loan for my house to live in? This means I would get another loan for a personal residence.