little worried

Here’s the deal:

I found a property that comps at $95,000 and the seller just wants $65,000. It needs about $10,000 worth of work and I plan on financing with a construction loan. Thing is, after the month that I’ve had I no longer have the money needed for a binder ($500) and home inspection ($350). I had money saved, however, my car had trouble…

I was thinking of borrowing $5000 to put into a high interest account for this purpose. I currently only have 2 credit cards which max at $750 total and I make over $30,000. I guess my question is whether or not borrowing more money would mess up my debt/income ratio and disqualify me from the construction loan?

Also, are there any recommended high interests accounts. I want to offset the interest on what I borrow. Thanks for your time

Sounds a little tight, but workable. One thing to consider is that lenders are also going to take into consideration your reserves for lending.

Depending what you have on the credit cards, you don’t sound like you will be that off for DTI purposes…

Another thought here is to buy the home, and see about arranging the sale price a little higher to include seller financing for the rehab costs. It sounds like you have a few dollars to play around with for appraised value.

I personally haven’t set one up, but a thought would be to defer the seller held second payments, and depending on your credit, get a heloc or refi down the road with a new, improved value from the renovation.

Additionally, with the new improved value, you might find yourself under the 80% mark avoiding MI…

As far as taking out additional credit, be a little cautious not to raise your monthly debt service too high, but if you do, and place the funds in a high interest account (or something), typically 2 months of it being on your bank statement is required by banks for seasoning… this might make the taking out of credit a good option…

Sounds like there is enough meat here to make something work with some creative structuring.

if it has 10k in repairs - you shouldn’t be paying more than 60,000 - the most.

is that 95k an After Repair Value?

is the area selling? [will you sell fairly quickly]

have you done this before?

do you own your own home?

Thanks for all the input!

Yes, the area is selling; and I plan on living in the home for 10 months-1 year.

The 95k is the comps on the homes around it that sold this year with roughly the same SF and Bed/bath

No, I have never done this before. This would be my first home.

Any suggestions? Thanks for your time and input.

are you married? getting married?

i’m not asking cuz i’m interested… :smiley:

noobie don’t play dat…“not that there’s anything wrong with that…” [Seinfeld joke].

No, not married. Not looking too either. May I ask why? I’m assuming the question relates somehow to my credit rating or debt/income ratio. Thanks again


actually it has nothing to do with those things.

it has to do with variables. you can have great plans for investing, such as living in an investment prop for whatever, fix it up, etc.

introduce a wifey into the mix and things can change on you. a wife is the same as a partner…only, if you aren’t on the same page…it’s a 1000 times worse!

that’s why i asked.

How can you get a construction loan on a property that is already built, I have never heard of that. What state are you in? You can get a home improvement loan. YOu should go in and purchase at a higher ltv. Have the seller pay 6% seller concessions to take care of your closing costs, etc also.