If i get one, and buy a home that I am going to rehab and sell in 1 year, would interest only mortage be best, as the payments per month as I do the project will be lower? But may their be a bigger penalty for prepayments? Thanks with any info.
What is good is what works for you, in my opinion.
My buddy just got a 100% loan for a rent and hold 1 year, and doing it interest only and on top of that a 40 year mortgage which makes the payments even lower.
I am not aware of him being faced with a pre payment penalty, however I am in NJ .
Some say the 40 years is crazy, I say yea if it’s your home but if it’s a flip who cares if its even a 100 years mortgage, if the payment is lower while I am rehabbing, I am happy, same as interest only, I just wouldnt do an interest only for a long time, do what you got to do to get in it and afford it while you have it, some ways may cost a little more in the end, but if you are still making a good profit, object completed.
PS** just make sure its not a negative am loan
Good Luck!!
Thanks, I qualify for 100% financing already for traditional loans, but I will use those for renatl properties. I was thinking interest only for flips, since the monthly carrying costs will be lower and i can concentrate on a great rehab project. But thanks, btw, I am in NYC, so if you can PM me, maybe you can show me which lenders your friend used, maybe I can get something similar in NYC. Thanks.
Howdy RBW:
My buddy just got a 100% loan for a rent and hold 1 year, and doing it interest only and on top of that a 40 year mortgage which makes the payments even lower.
Can you explain this. If it is interest only then the 40 year or 30 or 100 has no effect on the payment. It is interest only and that is it. Does it change after a year to a 40 year perhaps?
All I am saying is for flips , interest only are nice because it lowers the payment while you are doing the rehab work, and to me the lower the better.
I dont know of a 100 year mortgage but if there was I would use it for flips, if you are going to sell the house in 3 months or so, who cares how long the mortgage is for, I dont, less cost for me doing the flip.
As far as the 40 year interest loan, yes for the first few years it’s interest only, after that it changes , but to be honest I have not looked into that much for the long term because I have no interest in holding properties, rather flipping and the interest only loan is great for that, lower monthly mortgage for the several months or up to year I have.
If you want more info, I can pm you the contact info of my Broker (my wife,LOL) who specializes in rei financing.
Howdy RBW:
Oh I am good. I was just making sure you were not confused about the 40 year payment being a lower payment than a 30 year payment when the loan was interest only. I too like interest only when doing rehab. I am having a hard time finding money even at 36% interest only. I thought the phone would ring off the hook.
Ted: It is Amortized based on 40 years versus 30 years.
30 year : 100,00 loan at 30 years $280.74
40 year : 100,00 loan at 40 years $259.46
Howdy RBW:
What rate is that? I would love to have some payments like the payments above.
That has to be a start rate only.
Like a pay option arm.
$100,000 at 3.25% = $270.83 Interest Only
I am curious how long that rate is for?
Exactly right R. Hall… as far as how long I am not sure, I will find out though.
On the subject of prepayment penalties… They are not as big a penalty as you think. They are tax deductible in the same year that it is paid. So the money is not completely lost. Now would be a perfect time to do something like that because it is so close to the end of the year.