I am actively looking for my first flip. My mid fico is 550. I was approved for a first time buyers program with 0 down and 100% financing.
When borrowing money, can I borrow more for the cost of flipping the property?
If you are flipping with construction involved, you may be able to borrow 95% of the future value of the property. In other words if you were buying something for $100,000, but you were building construction with costs of $50,000, and the final value would be $200,000+, you would basically have more than enough for 100% financing because the final value would be more than what it cost you for construction. That is one situation. Another is if you had a seller concession you could get financing for 106%.
I recommend caution. Your loan approval likely assumes you’re going to owner-occupy the property. If you flip the property, the lender is going to see it as investment, not owner-occupied, and the lender could go after you for loan fraud.
I would agree with gstevenbray I don’t know of a lender who will go 100% LTV NOO with a 550. Being that you’re approved under a First Time Buyer status, that approval status will change when they find it’s NOO
Exactly, (2 the previous 2 messages)
All loans that I know of that type(1st time buyers) require owner occupency.
Check first
How long do you think we should occupy before we sale?
2-3 months
Nothing like encouraging mortgage fraud. Hell, whats a little felony here and there?
Hi Matt,
Why are you saying “felony fraud” ? If I live in the house 2 to 3 months, and flip it and sell it, would that be a felony? Amused Twinkle was just answering a question.
The ideal behind first time owners programs is to make homes available for financially challenged individuals. If this is a government backed program, and they get wind of you using the program to buy and flip property, they will come down on you like a ton of bricks. There are a lot of regulatory people looking at the lending industry these days, spurred by the introduction of hundreds of new products.
When rates shoot up and these people who are getting 2/28 ARMS with a 560 credit score and 50% DTI ratio start falling, I expect a lot of deals will be reviewed.
Chances are good you will be OK if you make the payments, but don’t kid yourself about what you are doing.
What should I do? Do you think I can find a lender with my score that charges me some sort of fee or prepayment penalty?
blondie777
There is always a lender. No matter what your score. You will just have to pay their fees then take a cut from what is left. Work it that way.
TRUE, but you’re not going to be at 100% NOO 550 FICO.
Okay, I will look for those lenders. I can always come up with a small down.
You need to read the mortgage docs to make sure there is no prepayment penalty. You should know if the lender is requiring you to live in the property for a certain period of time. My understanding is that 6-12 months is the minimum a lot of companies like to see.
DeeinAustin
I’m in Austin also, how do you find good deals here? I have made an offer on a house that was $30k under market. I was then advised on these message boards, that I should find a $50k span. I have been looking on the site: Austinhomesearch, and the good ones are gone, before their posted. My realtor does’nt seem that involved.
Where do I find these lenders?