Do they always have to be for investment only? Do you have to sell the property? I’m looking for a loan to “tide me over” until December, when i can qualify for a traditional loan. I have a rental property, owned free and clear, so I have good equity if that matters. I’ve found a house I want very badly, would anyone lend to me if it were to be my residence? What if I got a loan as an investment property and kept it :), is that a no-no? What are the pitfalls of these loans? I would have an attorney look it over… :deal.I’m expecting to pay high interest and interest-only payments, is that correct? many thanks for any and all help…
There are at least 3 types of money!
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Conventional - FHA - VA - Prime & Sub-Prime - This financing requires employment verification, 2 years tax returns and good credit above 600 or 620 now! Reserves may be necessary to show to ensure lender your capability to make payments. Prime plus now 5.75% single family excellant credit.
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Private Money - Private companies check credit more often than not. Credit score may drive risk and determine rate and points. Normally 9% to 12% interest and 3 to 10 points. May go 75% LTV. May cross colateralize.
Probable requires appraisal to determine value. Terms available typically 1 to 3 years. -
Hard Money - Normally at 15 to 20% interest, 1 to 3 points or set up fee at minimum and no credit, tax returns or reserves required. Real estate value driven. 65% LTV Max - 20% down payment required in most of country now.
May cross colateralize. Set up fee’s $500 to $1,000. Term 6 months with potential 6 month extension with good payment history.
This is just like a normal mortgage, if you don’t pay you will not play.
Normal foreclosure terms exist. Most lenders are 1st position only!
Private Money and Hard Money can be interest only.
Legitimate lenders will not ask for money up front and if they require an appraisal will allow you to pay for it directly.