Iv'e just bought my first property to rehab at a price I couldn't pass on. My problem is it left my finances drained, I had planned on getting a home equity loan for fix up and to reinvest in other properties. My credit is fair and my employment was good until I got laid off in Decmber. I started this business. Now larger lending co. send me to underwritrer companies due to lack of employment the last six months. Iv'e been working with a lender that wants to give me a $60,000 loan At 10.07% interest over 30 years adjustable to 6 points over the life of the loan. That is alot of money to pay out BUT I need to get cash now and my waiting period will be up in 2 days. Should I start over with someone else and be late on my bills, or should I Just take this as a learning experience and just eat this one? CAN SOMEONE PLEASE GIVE ME SOME HELPFUL ADVICE??? THANKS,ROGER ???
Roger,
I hate to be the bearer of bad news, but it sounds like you’re going to have to take what you can get at this point.
Even hard money lenders are going to balk at loaning you money becuase of your lack of income. If someone is willing to loan you money, I’d take it no matter how expensive it is.
Sorry I didn’t see this post earlier.
Thank you Stacy for responding to my questoins. I have allready taken your advice. I figure my tenants will make my payents anyway, or I’ll just cut my profit margine when I sell. It has been a learning experience! We are setting up our business to show my wife and myself as employees so this won’t happen again. THANKS FOR TAKING THE TIME TO RESPOND.
I know you have already satisfied your loan problem, but perhaps this will help in the future: With less than two years employment you will have difficulty with many lenders. Some Sub-Prime lenders do “stated income” loans. The rate is a bit higher, but you just write a “stated income letter” describing what you do and how much you make.
hello Pete, thanks for responding to my post. If you have the time could you tell me a little more about these other lenders? I’ve found another property I want to buy and since I just leveraged out my last property I’ll be short on rehab monies after I purchase this property.
The kinds of lenders that do “stated letter” loans are called “Sub-prime” lenders because they deal with B and C paper, or people with not-so-good credit. You could also go through a private, or “hard money” lender. This might be the best option for you since you have property as collateral and won’t need the loan for very long. Hope this helps!
Pete
Loans are built for qualification and rate on 3 things: Income, Credit, and Equity. Now assuming you can Prove income (full-doc), have good credit (700+), and have money down (20%) you will always qualify for the best programs a bank has to offer.
Now, anytime you move away from this your interest rate will suffer, WITH ALL LENDERS, no matter if they are A, B, or C paper lenders.
If you have a 700+ with 20% down but have to state income the rate will adjust. If you have Full Doc and 20% down but are a 600, the rate will adjust.
Anytime you take away from the eqaution it creates a degree of risk for the lender and the rate will increase to some degree. Alot of the time sub-prime lenders are a better interest rate than an A paper one; again, it depends.