I am looking at purchasing a duplex for $35,000 but I was told by my mortgage broker that she could not do any loans below $50,000. So I was wondering if anyone has been able to get the lender who holds the note on the short sale to finance the property for them. If so how did you go about making the offer?
Also I was told the reason that she could not go below $50,000 was because the government has recently passed regulations requiring the mortgage company fees AND the title company closing fee (even though the seller pays this) cannot exceed 5% of loan amount. Has anyone else heard anything about this?
I would really like to avoid paying cash if at all possible. Thank you in advance for your help.
try a locally owned bank, they will be more likely to deal in a loan under $50k, not a national bank, but one actually part of the community,yes if the expenses of a loan are over a certain point (I didn’t remember 5% but that sounds about right), but knew it puts the loan into a different catagory
Large national lenders will not offer financing a short sale as part of the deal - you will have to go through their regular lending department as if you are buying any other property.
Smaller lenders (portfolio lenders) like credit unions or regional banks are more willing to loan smaller amounts for real estate and offer financing incentives for their short sales/REO properties.
Your broker was correct. Unfortunately the gov. has gone so far in the other direction from the way things used to be they have made it nearly impossible for anyone but large banks to do the smaller loans because of fees. If you go over 5% of the loan amount in fees the loan becomes what is called a “high cost loan” which cause it to fall under the category of predatory lending. You will most likely have to find a state or national bank with very low fees to get this loan done.
I would go with the fifty thousand dollar loan as this would allow you to electronically put your bank into a custodial position and draw up a special needs trust … where the instructions would be to have the banks automate the payments of the surplus cash while you save your tenants privacy and gain more confidence with Tenants Insurance or purchase AFLAC ! ( which is not a bad Idea ) … then you and yours can truly enjoy the fruits of your labor as you did your Homework @!
When financing the purchase of a home in a short sale, the first step for buyers is to determine exactly how much lenders will permit them to borrow in this new and stringent lending environment. "