Posted by Carol on October 17, 1998 at 07:26:48:
John,
A mortgage broker who has access to private money, or is the guy himself the source of funds? Just curious. I’d love to have a similar relationship!
Carol
$10,500 Profit How Do I Explain It? - Posted by Randy
Posted by Randy on October 16, 1998 at 10:35:24:
Buying a “Don’t wanter”, market value $50,000,
seller wants $39,500 cash.
If I write purchase agreement for $50,000
with $10,500 deferred maintenance credit to buyer at closing.
Create a note and sell the note, or apply for a new first,
with no money down what kind of a response should I expect?
Any other suggestions greatly appreciated.
Re: $10,500 Profit How Do I Explain It? - Posted by Mr Donald (NORVA)
Posted by Mr Donald (NORVA) on October 17, 1998 at 22:21:56:
Randy,
You should have no problem with this transaction if you use a hard money lender or private investor or flexible mortgage broker with access to a myriad of programs.
The seller wants 79% of FMV, which you can cover with an 80% loan. Shouldn’t be a problem - except for closing costs, which you can either have the seller handle via credit at settlement, or you can have your lender advance enough to cover - depending on their flexibility.
Mr Donald.
dlm@bellatlantic.net
Re: $10,500 Profit How Do I Explain It? - Posted by Jimbob
Posted by Jimbob on October 16, 1998 at 10:51:36:
Randy,
The scenario you lay out will cause you more headaches than it’s worth. The buyer of the second mortgage will discount it so heavily, there will be nothing left. They normally wont go over 80% CLTV. Why don’t you try this approach?
Purchase Price: $50,000
Seller Gifts Equity to buyer $10,000 for downpayment
Buyer obtains new first mortgage of $40,000
The gift is 20% down, you pay no PMI.
If the property doesnt appraise at $50,000, lets say $45,000, you still have 10% down in the form of the gift equity but you’ll have to structure the sales contract accordingly, also most likely you will have to pay PMI.
You will have to pay your own closing costs, estimated at 3% of the purchase price.
Jimbob
Re: $10,500 Profit How Do I Explain It? - Posted by Bo(GA)
Posted by Bo(GA) on October 16, 1998 at 11:23:20:
Jimbob,
Have you used this “gift” approach by yourself successfully? I would think, dealing with hard money lenders, that it would not be acceptable to them, that they really want to see cash as the buyers down payment? But if it works, I already have a deal in works I could use it on, so your feedback will be most appreciated.
Bo
Re: $10,500 Profit How Do I Explain It? - Posted by Jimbob
Posted by Jimbob on October 16, 1998 at 14:43:38:
Bo,
I have used this approach successfully several times, I never went through hard money lenders, I always used regular mortgage brokers who dont get paid until the deal goes through. One thing to note, I always used this on “primary residences” it can be used on investment homes but I haven’t done it, and am not sure of the cash up front requirements.
The lenders pretty much knew that I had no money to get into the house but the deal was structured as if I had an interest in the property and thats all they need to sell my mortgage on the secondary market.
Jimbob
Re: $10,500 Profit How Do I Explain It? - Posted by JohnBoy
Posted by JohnBoy on October 16, 1998 at 13:06:03:
When you deal with a true hard money lender, they don’t care about you. They don’t care whether or not your putting any money down, your credit, your job, nothing about you. They ONLY care about the property. They will loan based on the properties value. The most you would probably be able to find is 70% LTV. Most only go as high as 65% LTV. If someone tells you they are a hard money lender and asks for your credit, or a down payment from you, or your income, or your job, then they are NOT a hard money lender.
Re: $10,500 Profit How Do I Explain It? - Posted by JohnG
Posted by JohnG on October 16, 1998 at 22:15:36:
I use a private mortgage broker.
He will lend me 97% of purchase price with a 1% fee and 18% interest. I fix up and re-sell within 1-3 months. He is happy. I am happy. Any comments on this arrangement ? I don’t know if you would call this guy a hard money lender - he did take credit app etc in the beginning. Now he goes and looks at the property from the outside and takes a picture and funds are at my lawyers next day. I am really happy with this arrangement and while it is no doubt expensive, I can recoup my costs on resale.