I’m going to buy an investment property(SFH) hopefully within september. My fico are 719,719,687 the lowest one has a 30 days late payment on car loan. I’m employed but get it off the book so I can’t show w-2. I have some money in my bank(6000) and can get additional fund from my LLC’s credit card (10000).
I’m looking to buy a property worth about 140000 so I think I can put 5% down on this transaction.
Here is the question, Can I get a loan? At what terms? and where or whom I should contact?
Yes you can definately get a loan. There are many choices so the terms will depend on you’re plans for the property. Will you be holding short term or long term. I would recommend a 5yr arm possibly. Its not too short but not too long and the rates are good. You can use a broker on this site.
We should probably explain your options so you know the process and how this can be done. Lenders allow those with good credit to use programs such as stated income, no ratio, and no doc.
In order to use a stated income or no ratio loan, a client must have been on there job for 2 years or self employed in the same industry for 2 years. In your case, if you’re employed by somebody, they would have to fill out and sign a verification of employment acknowledging you work for him. Have you filed taxes on the income you received off the books and do you want to list that as an income source on an application? On the otherhand, if you were being paid as an independent contractor (self employed) then all you would need to do is have business licenses or a lette from a cpa acknowledging that you have been self employed in the same industry for the past 2 years. So again, you would have to have filed a schedule c on your tax returns.
How long have you had your LLC? You may be able to use this as the income source if owned over 2 years.
Sometimes you can even use 12 months of bank statements to show your average deposits.
If you dont have the 2 year history then you’ll need some type of loan product with no employment needed. These are NIVA (no income/verified assets) or a true no doc loan with nothing at all needed.
Nobody can give you terms until they have complete details on your credit, employment situation, income, asset, and goals. If they are quoting you, run! There’s to many brokers that overlook important questions then quote rates which are later discover unobtainable before closing. You should first be getting sometype of worksheet that has specific questions related to investment properties. As Zach mentioned, there are several sources on this website who specialize in consulting investors on which loan products are best.
One other point, there are very few lenders that only require 2 months of reserves for investment properties, the majority want 6 months if you are using an asset based program. This considering that we are speaking about conforming products and not subprime loans used for credit challenged clients.
I work with an investor who is new and cannot prove income as he does not have 2 year history usually required for stated programs. Until recently we had to settle for 70 % loans as he was a no doc. Have found a few lenders however who will add assets together (including equity in private residence), savings, mutual funds, divide by 120 to come up with a “monthly income” for you. If you can do this in conjunction with a 5/1 arm loan (for lower rate and payment) you are there. My advice, talk to a good mortgage broker and ask about any new asset allocation programs.
This one seem interesting to me. How interest rate will be different? And the asset needed to be verified need to be mine? Can I borrow to show in the bank statement?
Thank you
Yes, Some lender will require the funds to be in thier at closing. Some will requiring season of funds. Rates are a little higher . Not that much if you can swing it.
Anytime a lender is requiring reserves (reserves = enough liquid assets to cover 6 months of the expected payment), these funds need to have been in your account for at least 2 months. It cant just show up.
Interest rate increases a bit because of the risk to the lender.
It should be noted that commercial lenders have different guidelines.
For those reading this post needing loans on residential 1-4 units, plan on having reserves as previously discussed (or use a no asset loan). Most wholesale lenders will require them
Commercial terms are also different than residential. Usually balloon notes and higher rates.