Hi everyone. Im new to the REI thing and hope to get y foot in the door by the end of febuary. Just a couple weeks ago i found a property i was ready to purchase. It was a single family, tenant occupied. i had my pre-approval (100% fin.)in place, and was on my way to fill out the contract by the agent whom i was dealing with. Right when i got on the road the broker calls me and ask me if i was going to be livin in the property or was it going to be an investment property. I then told him it will be an investment. He then says thats certainly going to change the approval, told me i have to put 10% down aside from the closing cost( im guessing this was because of my credit score). The sad news is that i dont have the 10% to put down. What i was thinking of down is taking out a school loan to cover the 10%down and the closing cost considering the fact that i wouldnt have to pay it back untill im down with school. Do you guys think thats a good idea? do i have anyother options besides waiting?/ I really want to do this, im tired of waiting around. Is it illegal to rent out a property if the loan was a non commercial loan?
Help
Thanx
Jean,
It is not illegal to rent out a non-commercial property. It is illegal to lie and say you are going to occupy the property if you do not intend to. Depending on your credit scores and employment history you may qualify for 95-100% financing on this property. You may want to get a second opinion from another broker. Also, the rate on the school loan will be much lower, but when you do have to start paying it back you will have a much shorter amortization period (instead of a 30 year note you will only have 10 year note) so your payments will be much higher. How much longer do you have in school? I would check into a higher LTV and ask the seller to pay some of the closing costs. The less money you have to come out of pocket the better.
I have about 2.5 years left of schooling. I spoke to another broker and he told me 720 or better gets you 100%. Im currently at 670. I know i can save up the money in a month or two, but i just hate to keep waiting. I guess im too anxious.
How much $ is 10%? Insome places, that’s $5K and in some places, that’s $50-60K…
Keith
well the property is 36,000. so thats 3600 plus 2500 for closing which leaves me at 6100. Im not even sure if im going to be purchasing that property anymore my profits is $115 a month (tenant occupied) which aint bad being that im just starting off, but is that even worth going thru with the deal?
Also, if i take out a school loan to cover the 10% , etc. Would it stop me from proceeding with the xx,000 bank loan? back to back loans , Outstanding period ?