39 years old
just finised up a two year divorce.
My R1 credit has been messed up.
i owe 24,000 in bad credit card debt which i am going to pay off in the next two weeks, i have kept good standing with the collection dept. to get a judgement off me.
i own 1,000,000 in real estate free and clear, 900,000 of that is my home the rest in investment properties. my monthly bills add to about 1,200 a month and my net income is 4,200 a month. i would like to pull a line of credit to start investing. Does anyone know how much and at what percentange could i get?
If your primary home is valued at $900K, and there is no mortgage on it, then you should have no problem getting a line of credit for $450-600K (50-70% LTV), especially if you pay off the credit card debt. Interest rates can vary greatly between banks on subpar credit, so I’d shop around (or better yet, find a good, preferrably referred, mortgage broker to do it for you).
If you prefer to do the shopping yourself, I’d stick with the smaller, local banks as they’ll have more leeway in their guidelines for borrowing. That said, most lenders will glady lend 50% LTV on a property almost regardless of credit history. Shouldn’t really be a problem with the debt to income that you posted.
Raj
Thank You
Sorry to hear about your situation. However, you have a great opportunity to start over. If you have not read it yet, I strongly suggest reading Rich Dad Poor Dad. I am not sure of your life situation but if it where me, I would sell the house, buy a 200,000 smaller house, take the equity and invest that. If you have $700,000 in cash to invest and you don’t have to pay a mortgage payment on that, the money you can make w/ smart investments is beyond your imaginagtion. Within 2-5 years you should be able to buy a house that will be nicer than the one you are currently in and pay for it in cash as wll as have have plenty of money for investing.
PS. If you have a 200K house and 700k cash your credit score will increase quickly.
Good luck in what ever you decide.
THANK YOU THATS THE WAY I WAS LEANING
Of course, only you really knows the whole story of your situation, but I don’t necessarily agree with the advice above, especially not knowing all of the facts.
First, selling your house doesn’t guarantee you $700K in cash to invest. I don’t know where you live or your market’s condition, but chances are you’ll get less than a $900K offer. Also, will you have to pay any taxes on the profit from the sell? Does it have to be split with the ex-spouse if sold?
Second, not knowing your area, I don’t know what $900K or $200K buys. Is downsizing to a $200K home even feasible?
Third, making “smart investments” is usually every investor’s goal. However, it’s also been my experience that cash investor’s frequently make unwise investments. Maybe it’s because they know they have the money, maybe it just burns a hole in their pocket, I don’t. The point is that if you choose this route, be sure to choose WISELY.
Also just want to add: If you have $700K in cash, you can dump that into a bank CD account. Earning a small 3% interest will net you $21K a year (simple interest) which is annual earnings for many. Also, a bank will let you borrow up to 100% of a CD account, so you can have $700K in cash in the bank earning 3% AND you can have an equity line for $700K when you need it.
Fourth, If you have a 200K house and 700k cash your credit score will increase quickly
Don’t understand this one at all. If you have a $200K house, which you paid cash, and $700K in cash, how exactly that will magically increase your credit score. In order to repair and improve your credit, you will need to a) pay off all bad/outstanding loans/liens, and b) borrow and pay off new loans and liens. Simply having a house and money doesn’t do it.
Hope it helps,
Raj
Raj,
I am usually a low key kind of guy. However, if you are planning on going through this website to try and pick apart peoples advise, I would suggest you can find better use of your time.
I happen to know a little about money.
1st-If she has $300K or $700K profit from her house it really doesn’t matter-the point was that when she has liquid cash her borrowing power and options are enhanced. Your comment is one such example: “If you have $700K in cash, you can dump that into a bank CD account. Earning a small 3% interest will net you $21K a year (simple interest) which is annual earnings for many. Also, a bank will let you borrow up to 100% of a CD account, so you can have $700K in cash in the bank earning 3% AND you can have an equity line for $700K when you need it.”
2nd-I also now a little bit about credit scores (mine happens to be 803). When you have cash many things can contribute to a higher score. 1. You can pay off most or all debt. 2. If your cash is invested and generating cashflow or some form of returns, in most cases this would be considered income or gains or additional assets. (now I hope you can figure out what that will mean for your credit score). 3. As most investors do on this website, they leverage their money w/ OPM-in many cases lenders. When investing in houses and paying the note/mortgage monthly (on time) your credit score improves. The reason most of the people w/ bad credit in America have bad credit (>85% of this group) is due to lack of fund to pay debt on time or their debt to income ration is escalated. Now, I am sure you can see that if she has 200, 500 or 700K in cash that she can pay her debt off, build up investments that pay her, and keep a low (or reasonable) debt to income ratio, that this will dramatically improve her credit score!
prewettmary-I hope whatever direction you decide to go in that you will have great success. Always stay positive and surround yourself w/ positive, experienced people. Take Care
btkgator,
I really couldn’t care less if you are a low key kind of guy or not. If you are planning on whining about anybody that doesn’t agree with your posts, then I’d suggest that YOU find a better use of your time.
Let me point out though, before you decide to go off the deep-end again, that what I said was that I did not necessarily agree with your advice BECAUSE I did not know all of the facts of her particular situation. Also let me point out that your original post was basically, sell house, make $700K, make smart investments, magically obtain good credit. That quite have the details that your second post contains, and being such, not something that I would have supported wholehearted, as it seems that you so desire.
I happen to know a little about money.
Congrats! I happen to know quite a bit about money which is why I made the comment that you quoted. Examples work awhole lot better than “make smart investments.”
I also now a little bit about credit scores (mine happens to be 803)
Congrats, again!
When you have cash many things can contribute to a higher score. 1. You can pay off most or all debt.
I think that one was covered, both in the original post and my replies, thanks.
2. If your cash is invested and generating cashflow or some form of returns, in most cases this would be considered income or gains or additional assets. (now I hope you can figure out what that will mean for your credit score).
I think that I covered that one, too. IF you invest CASH (ie no mortgages/loans/etc), which, it seemed you implied in your post, then you don’t have any credit to generate a credit score, so it pretty much won’t help your score at all. Yes, if you have income producing assets, your debt to income ratio will be higher, which increases your chances of getting a loan, but it does little to actually improve your credit score.
3. As most investors do on this website, they leverage their money w/ OPM-in many cases lenders. When investing in houses and paying the note/mortgage monthly (on time) your credit score improves.
Well, I guess you’ve got me there. No, wait. It was YOU who implied using the cash to invest, not OPM (okay, at least you didn’t actually SUGGEST OPM, right?). What? Oh yeah, prewettmary did say that she had bad credit right now, so where o’ where is she going to get all that OPM anyway? That’s right, you provided a good, solid example. No, wait. Sorry, that was me again, not you.
btkgator,
I’m sure that you meant well, and are a knowledgeable guy. However, smarting off because you got your feelings hurt isn’t a good way to promote yourself. Just ask prewettmary. Now, she probably doesn’t give a crap what either one of us has to say, period. Finally, in my defense, I don’t feel that I “picked apart” anything. I merely elaborated on the post.
As for the above, forget about it. You see, it’s late. I’m tired and cranky. And I’m not a low-keyed guy, so I tend to backtalk pretty fast, sorry.
I hope whatever direction you decide to go in that you will have great success. Always stay positive and surround yourself w/ positive, experienced people.
Ditto
Raj