Can This Work? - Posted by RichTX

Posted by Michael Morrongiello on March 06, 2000 at 17:05:47:

Yes it would be feasible for you to purchase the adjoining home and secure its purchase by a “blanket” lien mortgage that would secure BOTH your primary dwelling and the other rental home. You might have to contribute a small amount of cash to make the deal happen, however.

As for the $76,000.00 representing an 80% (ITV) investment to value, that is questionable since 80% of the $90,000.00 estimated FMV for the (2) two homes would be $72,000.00 not $76,000.00

In order to mitigate the discount of the paper and to have an optimum interest rate on that blanket mortgage note to be created to achieve that, I would need to know a lot more about your credit and employment background? An interest rate of 10.50 % amortized over 30 years would produce a monthly installment of $740.94 based upon $81,000.00 being financed by the seller. (this limits their starting LTV to 90% of the $90K combined collateral values). This might work.

Conceptually the deal looks do-able.

Michael Morrongiello

Can This Work? - Posted by RichTX

Posted by RichTX on March 06, 2000 at 15:03:59:

I owe $36,000 on my home, FMV $45,000. I’d like to buy the attached zero-lot-line home for a rental ($600-650 rents in area) and structure the financing such that a new loan is secured by both properties. Total FMV $90,000, loan proceeds of $76,000 (from new note discounted and sold at closing - ITV of 80%) disbursed $36,000 to pay off existing loan, $40,000 to pay seller of new property. The discount to $76,000 would possibly require a face amount of $82,600 for the new note. Is this feasible? What interest rate would be advisable?

The property is listed, and I haven’t yet met with the agent to explain in detail what I’m thinking. Her preliminary calls to HER mortgage sources, you might expect, told her that it was impossible to secure one mortgage with two properties!