Hello all,
I’m a newbie and I have been reading A LOT about real estate. I am ready to test the waters and need some advice on getting started. I really want to do some rehabbing, but my financial situation is as follows. I don’t have any of my own money and my credit score is around 630 to 650. Can I start looking to get money from HML now and get a pre-approved letter so I can start looking for rehab projects? If so, what do I ask these HML so I know which one to go to. Appreciate any help you may have. I just want to get out there and make it happen instead of reading, reading, reading. But I will also continue to educate myself.
You are making some WISE decisions,
I would like to tell you that HML are not the only answer
you can also get money other ways by using conventional lending also (this is only one example)
If the rehab work is just cosmetic between 5-10 k then you can have a contractor do the work for you and the seller gives the money directly to escrow and when the work is completed the contractor gets the money from escrow.
The important thing is that this is well spelled out in the contract who the contractor is and how the money is going to be dispersed and you don’t want the contractor to have the money until the work is done.
If you choose to use a HML They want a break down of the costs of acquiring the property, all the rehab work (usually 3 indepenant bids. Executive summary which consits of who you are, what your exit stategies are, The LTV your buying to property at, ARV, Appraisal, title work,and how long you want financing for. Some HML want a traditional loan application.
Some times they will want a credit report and financials if you want a better deal.
Hope this helps you
Thanks for the help.
If you’re credit is around 650, you have very little revolving debt and a good income, you may be able to secure a rehab loan from a bank. Just ask around. This is the route I go, because HML’s eat into profit margins. Just make sure you can afford the holding period if the deal goes sour. Good luck.
I know of a handful of lenders that offer Renovation Loans.
First the govt has one called “203k” Renovation Loan. This is a FHA product.
Second, the conventional market has come out to compete with the govt. and call their loan the “Fannie Mae Homestyle” Loan.