I have a preforeclosed home that I am waiting on approval from the bank for short sale. I will be getting it for 154k, appraises as is for 190k. The lender my realtor goes with will do a NINA with 10% down. What kind of loan is there that would still be NINA, with 0% down and interest only option?
My foreclosure realtor has additional homes (nice suberbs east of Cleveland, OH) that I would like to get under contract. Is there a way to do additional loans on these properties with the above mortgage requirements? My credit is excellent (mid 700), home is paid off (215k), and I have about 20k saved for rehab money. I am currently on workmans comp since July, with no personal income as my company is fighting my claim (I do expect to win). My wife does work, as makes roughly 27k / year. I am trying to put down as little as I can, nothing, if at all possible, on the homes. These homes are nice homes with very little rehab work needed (paint, carpet, landscaping).
What loan options are available for a situation like mine?
Are these properties going to be buy and hold or do you plan to flip them? There are plenty of loans out there that will allow you to do NINA for around 95% LTV. Especially if they are buy and holds. Another option you might consider is taking out a small HELOC on your current property, this will give you some operating capital to work with.
100% CLTV NINA is available, but you would end up paying so many points on the second it would not be worth it. I just checked out the rate sheet based on the information you provided and you would. Your talking about $1,500+ just in lender fees plus the loan officers fees, etc and your bringing 5% - 6% of the purchase price to the table.
Investors need to be aware that when they plan to flip properties quickly that this could be more expensive than normal. Part of the compensation that brokers receive comes from the bank and is based upon the interest rate we sign the client up on. Obviously, the higher the rate, the higher the premium the bank pays us.
In most financing scenarios, a broker will structure the loan to make a mixture of premium from the bank along with origination charges upfront at closing.
A lot of lenders will ask for the yield spread premium back if the loan is paid off within the first 3-6 months. So if an investor is selling the property quickly a higher origination charge would be structured since no yield spread would be paid by the lender.
You will find some broker that could careless, they’ll take the chance that the lender doesnt enforce their recapture policy. Some direct lenders may be able to set deals up like this for you too, their loan officers get paid off their monthly volume and not the individual loan. However, you may not find a direct lender to do a 100% nina.
100% financing requires a 1st and 2nd combo. You’ll have loan fees associated with both loans. My recommendation would be to use a heloc on your primary home. Setting this up would be a one time fee.
This would elliminate having 2 sets of loan fees on all future transactions. Financing is financing, no matter which property it comes from.
If you end up taking a loan on your primary I would recommend avoiding a Heloc as the interest rate is adjustable monthly and it reports as a revolving account on your credit report. If I were you I would finance a cashout loan on a 30 year fixed rate for however much money you think you will need to put down payments on your properties. You can also use this money for monthly expenses for yourself, and to pay for the monthly payments of the properties you’re acquiring.
You will have an extremely difficult time finding 100% NINA. 95% is a no brainer, however, with your credit score. 150k loan means 5% down plus about 5% fees= about 15k cash upfront. Also, you need to avoid anyone who tries to hide points and fees on the 2nd mortgage of your purchases. I never charge points on the second mortgages of my loans and the total costs come to about 300 dollars on these 2nds. All substantial fees (including the points charged by the loan officer) should be charged on the 1st loan.
I agree with you in some cases that a fixed 2nd is better than heloc. Considering that Greenspan is out and Bernanke is in, we have no idea how the Feds are going to react to inflation.
In this case however, his needs for cash would be short term since his goal is to flip properties, buy/sell quickly. If he took a fixed loan:
#1 he would have to guess at how much he was going to need and possibly come up short.
#2 he wouldn’t be able to paydown and borrow back
#3 once the loan was paid down he’d have to open up another 2nd. More costs and who knows where the rates would be at whenver he’d need to do that.
#4 it wouldn’t be interest only and his cash flow would suffer.
I also agree with the heloc thinking.Im not a lender but a studier .His home is paid off so there is no such thing as a second for this fellow.teh heloc will allow for flexability and I just opend a FIXED rate interest only heloc at 7.25% .Yes it shows as revolving but if you use it to your advantage and reninvest it and pay it back as scheduled it will actually help your credit.
If any of these properties need rehab. I reccomend a product I have had great success with for other investors flipping houses.
It is a loan that incorporates your rehab and closing costs. You can borrow 95% of ACV (as completed value) or purchase price+ rehab cost+ allowable closing costs. This loan is excellent for your situation and has worked well for others I work with and there is NO PREPAYMENT PENALTY.