I’ll preface this by saying I know very little about financing.
I’ve got a 750+ credit score with 1 judgement that I am working to clear up.
I have a property that will appraise out in as-is condition for 230k but I can buy it for 195k. ARV is 300k w/30k in repairs. I am looking to do a 100% full doc loan. This property is a 2 flat with garden apt. Total income from building should be $2,200 per month. I plan to hold this property long term and not have negative cash flow.
The problem you will have is not necessarily getting a good rate, but getting financing on a NOO prop at 100% ltv. Most will do 90%, some 95%. Rates for NOO over 80% for 30 yrs will probably run you about 7.5%
good luck!
What does “NOO” stand for?
Non Owner Occupied
How much would that 7.5% interest rate come down if the property was owner occupied?
I think you need to work with a good mortgage broker.
I bought a duplex with a true ARV of $175K. I paid $115K and put $15K into it. The broker got me a loan with Regions Bank for 100% of the purchase price, $10K in fixup money, and closing costs. I could have gotten all of the repair money if I wanted, but it would have been on a construction draw. Up to $10K, they simply fund at closing, and I thought that was easier than going on a draw schedule for another $5K.
Even though it’s not “construction,” per se, You should be able to find a local bank that will do a construction loan for 75% to 80% of the final value, which in your case is 100% of the acquisition and rehab cost. This loan could be a 6-month loan that needs to be refinance elsehwere, or you might be able to get the permanent loan approved at the same, to go into effect when the rehab is done.
You’ll pay another point for using a loan broker, but it’s worth not having to tell your story to five different banks until you find one that gets it.
With your credit score (and in the absense of knowing what the sole judgement you are working on is, DTI, etc.), it sounds like you could potentially qualify for a NOO CTP (construction to perm) loan.
One particular program I am aware of allows for 100% financing of purchase price + repair costs + closing costs as long as the sum total doesn’t exceed 80 ARV.
Regards,
Scott Miller
Thanks to all for the replies. The judgement/collection against me is from an eviction 2 years ago from an apartment complex I lived in with a roomate.
When I say I am working to clear it up I mean that I have offered them less than the owed amount. They wanted $1.5k for a $2.5k position, I declined and offered $1k to which they said no and have not spoken to me since for the past 9 months. oops.
Anywho, I might be in need of a mortgage within the next 30 days and this will show up. What are my best options? If they will not take a discount how can I purchace the home and have the collection come out of the loan transaction or in someway not have to pull cash out of my pocket?
The collection actually shows up on only 1 of my credit reports. Does that mean it will not show up on the other two if the lender pulls them.
Thanks for sharing more about your situation; here is my advice/comments:
a. Resolving Collection Issue: Offer to pay them what they want (1.5K) in return for a absolute extraction of all notes/history pertaining to this collection account from your credit report. Do not pay anything until you have proof that this has been done to your satisfaction (this is your leverage).
b. Assuming that this is an isolated incident, there are lenders that are willing to overlook this with a valid explanation.
c. Some loan programs allow for adverse credit (like tax liens and child support) under a certain dollar value (usually 5K) to remain open.
d. As this incident happened over two years ago, the damage has already been done and I would not elect to pay this back UNLESS they are willing to work with you (see item #a).
e. The credit reports that we see as consumers differ from those ordered by lenders (both in scores and content).
Hope this helps.
Regards,
Scott Miller
Scott
I will try to contact them and agree to pay the 1.5k for the full satisfaction of the collection.
You say “Offer to pay them what they want (1.5K) in return for a absolute extraction of all notes/history pertaining to this collection account from your credit report. Do not pay anything until you have proof that this has been done to your satisfaction (this is your leverage)”
They will not flag the collection as paid/satisfied until I pay them. They had previously indicated they account would be listed as satisfied once I paid the amount. Is this not to be believed? I do not see how I can guarantee that they will do what they say. Thoughts?
Paid/satisfied is quite different from non-existent from a credit history standpoint. One says that you messed up and made amends and the other gives no indication that a problem ever existed. I repeat, you don’t want a paid/satisfied conclusion to this matter, you want it GONE.
To me, it is not a matter of believability or trust, but leverage (you have something they want, trade it for something you want…).
Offer to establish an escrow account that requires dual authorization for withdrawal…deposit the 1,500.00 into the escrow account and inform them that you will grant access to these funds once the “black mark” has been satisfactorily removed. Offer to put such statements in writing and pay for the notarization of the same.
Now that it is in writing, in the bank and has been witnessed, “sensible” parties should provide little resistance (they are getting what they want, and in the end, how do they profit/benefit from smearing your name and credit history).
If I knew the history/specifics of this situation, I could offer additional strategies to handle this matter (contact me offline so as to preserve your privacy).
Regards,
Scott Miller