Hi Group…this will most likely be for you LO/Brokers!!
O.K. Just “trying” to get started here, and getting all my little ducks in a row. Is there any sort of Reg./rule that lenders won’t use borrowed money for 20% down for investment(rental) property. God, with so much to learn, i sure wish i understood this financing scenarios a whole lot better. Let me clarify(if i can). My situation…wife and i own our primary, well, except for the last 19k.
Assed at 79k. We both have full time jobs(been at each long term. In 2 mos. we will be completely debt free, except for mortgage($382.00) mo. Gross 60kyr. FICO’s
of mid 700’s w/ perfect credit payment history last 15/16yrs. Perfect as in “NO” BK’s, lates, chg offs, absolutely no nothings, except pd. as agreed’s!!
Here is what we’re thinking of doing(if possible)
Take out heloc for say 40k, use approx. 30k for 1/2
PCF properties(20%dn + lip stick), leave 10k alone to cover emergency’s. Now i would have to finance 80%
of rental properties. Would i have a problem doing that
shortly after(1-2 mos.) doing heloc loan? ??? And “not”
that i’m planning on using 30yr., but at the age of 56, if i wanted to, how much of a problem would that be?
Our goal is to accquire enough property over the next 10yrs. to create an xtra 2k mo. SS cushion.(long term rentals). Hopefully pd. off by then, or within 15yr.
O.K. guys/gals, give me the straight-up on this “please”.
Have 9:00am appt. with L/broker tomorrow, and i’d sort of like to know what to expect, or at the least not seem totally ignorant. :-[ No “cash” build up, other than
equity. Reason, been on 8 mo. debt reduction.(13k)
Thanks to “all” in advance
You should be ok. Not having any assets will be your biggest hurdle. Most lenders want to have 6 months worth of mortgage payments in a verifiable account. These funds should have been in this account for at least 60 days.
You will find that some lenders will not allow the proceeds from a heloc to be used as reserves. This should be mentioned at your appointment. If needed, funds could be taken out of the heloc now and placed in a savings account. The broker may not need to do this though.
With 80% financing that should be a breeze. If you’re buying properties below market value then you may still have great cash flow on them even if you do 90-100% financing. This would allow for more properties to be acquired.
There are a lot of questions the broker should be asking speficially to investment properties. It never hurts to have several people reviewing your options so feel free to contact any of the people on the board for additional consultations.
Ben,
Thank you so much for your reply. I’m not sure i follow you on the 6mos. of mortgage funds in verifiable account
for 60days. Do you mean the amt. of funds from the heloc? If yes, we have not applied for the heloc yet. Or do you mean 6mo.of mortgage funds for the mortgage we have on our primary(1st)? Either way, i did not mention the fact that we do have an savings acct. with 10k in it that 9k+ has been in it for over 60 days. Even tho the use of those funds are not planned for our RE
venture. But i suppose the amt. could be considered
sufficient for lender purposes. Do we have to divulge
the use we have for those funds, or is it enough just to have them in an acct.? I don’t want to be guilty of any type of deceptive info. :-X But the fact is, that at least for now the funds “are” there, and verifyable
Thanks
You may need up to 6 months of whatever the mortgage payment would be on the new investment property. So if payment with taxes and insurance is $1,000 you would need $6,000. The funds you have should be sufficient. You do not have to divulge what your intentions are AFTER THE CLOSING. If the funds are taken out of the account DURRING PROCESSING and after the initial verification, by right the loan officer should convey this to the lender.
With your scores, debt ratio, assets, and low ltv, you should be just fine.