Is there a way to do this deal?

General Real Estate Investing
1

This is my first prospective deal.

I would like to purchase a pre-foreclosure home from the owner subject 2 because I have no money and my credit is not established enough to do conventional loans. The home is worth 280,000 from what I can tell on websites like realtytrac and zillow and trulia the owner owes about 46,000 and they are 8,000 behind. I would like to do the deal and then quickly refi cashout and give the current homeowner 20,000 of the equity and I need to do it withing about thirty to forty-five days if possible the original purchase price of the home is 157,000. I heard fannie mae may have a way to do it but dont completely understand it. I need someone to walk me through the entire process because as I said I am very newtothis. Thanks for any help you can give me.

2

In a word, “no.”

If you weren’t going to live in the house, and you simply needed enough to cover the existing loan balance of 46k, plus 8k, plus another 20k, and this didn’t come to more than about 70% of the current value of the property, you could simply borrow from a HML, and buy it outright, giving the seller 20 grand, and owning the house as an investment.

After a year, you could begin to look to refinance it. Refi’s can happen faster in some circumstances (LTV, cash out amounts, etc.), but not without great credit.

The issue with refinancing a non-owner occupied property, without great credit, is that you’ll need at least 12 months of proof of on-time payments, and the rates are likely to be very high, and the terms a lot shorter.

If you refied instead as an owner/occupant, the rates would be lower, and the terms would be longer, but again, without great credit, you would still need a proven payment history.

All things being equal, you’re likely to be able to borrow at a higher LTV (loan to value) as an owner occupant.

3

Thank you very much, If I am going to go through an hml could you tell me or point me in the right direction as far as what paperwork and steps I need for “subject to” deals I am in California.

4

If you’re going to buy ‘sub2’ why do you think you need an HML?

5

Originally I thought I needed to do a sub2 because I thought umps wanted more credit but after further research your right. So that means I just need to purchase the home out right with an Hmm and go from there right? So then the question is what are the steps and documents I need to purchase the home from them?

6

Sub2 deals can close with less complications than with HMLs for banks.

If the seller’s loan terms are acceptable, and he agrees to a sub2 deal, we can close as fast as it takes our traveling notary to show up and witness our signatures.

Then it’s just a matter of making sure the deed is marketable, and recording it.

I’m not saying that persuading a seller to agree to a ‘sub2’ financing agreement is simpler and easier than offering to cash them out, but I am saying, if the seller agrees, the sub2 closing can happen really fast.

And for that matter of course, a sub2 closing/financing doesn’t depend on an appraisal, or a credit check, or a financial statement, or a termite report, or a title policy, much less a title company.

I personally do not purchase title insurance when I buy using sub2 financing. Again, I check the deed, and if it’s clear, I record it.

Of course, when I sell, my buyers pay for all that crap.

Elsewhere I’ve posted that my total closing costs are often less than 200 dollars …even on higher-end houses.

Try that with an HML or a bank.

So, if you can avoid an HML, I would.

7

No, you cannot…
If you are buying it just to overcome from your existing loan or mortgage.
You should have to buy loan to value in a highest investing manner inste of just buying it simply…