I have a question and i hope you all can help me. A friend of mine is going threw foreclosure but not from a bank. But from the past owner it is owner financed. My question is he only owes around 25,000 which is the principle the property is worth atleast 83,000 After repairs. should he get a hard money loan or an equity loan. His credit is not poor but it is not great either. any help is greatly apprecitaed thanks
Here’s my feedback…
- Your friend can’t put on subordinate lien (a HELOC) on a property in foreclosure.
- Most hard rehab lenders only lend on investment properties.
- Most subprime lenders will have cost to cure limits that might restrict your friend’s options.
- Hard money lenders that offer foreclosure bailouts will be LTV based not ARV based.
- Foreclosure bailout loans will be based upon “as is” value not after repair value.
If you can share more information, I or someone else could possibly assist you further.
Regards,
Scott Miller
Okay it is an investment property is their a way that i could get a hard money loan to payoff the principle which is $25,000 plus 3% interest with an as is value of $55,000 to $60,000. Do the repairs and sell it. also i’m nineteen years old will that effect my chances of getting a loan from a hard money lender. thanks
Okay, what do you do for a living that you originally got the loan in the first place (was it a gift from a family member?) at 19, 2. If you keep the ltv below 70 you should be fine with hard money. 3. do you have any idea what your credit is like- how affected were you from this foreclosure. 4. can you work out a payment plan that can stop the current foreclosure (and actually pay it j/k) and buy you some time? 5. Start working with someone who can do the bailout soon. ps. some people will have a problem with you being 19 and some will simply not be an issue- hope you are working currently though
Hard money loans would allow you to potentially finance the cost to purchase + rehab costs + closing costs (and sometimes mortgage payments during rehab period).
What is the purchase price? What is the as is value? What are the estimated costs of repairs? These are some of things you would need to share so that I and others could determine if you have a solid deal. If you are suggesting that you can pick this up at 25K + 3% or 32.5K with a 83K FMV, the cost of repairs will determine feasibility.
Hard money loan decisions are predominately driven by the available equity in the project, but your credit history will be reviewed.
Regards,
Scott Miller
It was not me going threw foreclosure but a friend and i was trying to figure out a way to help him as well start my investing career. my credit is not good or bad but it is unestablished really. to answer EZ Loanz questions the purchase price is around 30,000. the as is value is around 55,000-65,000. the repairs i figure to be around 10,000- 15,000. and the fmv is around mid 80’s to low 90’s. thanks