Posted by Jean Scott on January 24, 2009 at 08:28:36:
I have a tenant in my house with a three year lease, I will not lose the house so that is not an issue.
I have five grand to put down, which is more than enough for the FHA on this house, but not the 20 grand needed for a conventional loan.
Hard money and refi loan question - Posted by Jean Scott
Posted by Jean Scott on January 23, 2009 at 06:49:05:
Long story short here:
I canâ??t get an FHA loan as I already have one, and while I did have the (now) requisite 30% equity in my house that would allow me to get another the plunging home values decimated it and now I am upside down on my mortgage
My husband canâ??t get one because of a lack of payment history on otherwise good credit.
I donâ??t have 20 grand to make a down payment on a house.
To purchase the home we are looking at, the advice is to get a hard money loan since it appraises for way more than the bank wants. It is a foreclosure. Then, they want us too refi within 30 days into a standard 15 or 30 year fixed using the equity as the 20 percent down. No one appears worried about it but us. Does this all sound kosher to you? I really want this house, but I am not familiar with this way of doing it and I am leery.
Re: Hard money and refi loan question - Posted by River City
Posted by River City on January 24, 2009 at 01:05:03:
Having an FHA loan should not deter you from getting another FHA loan as long as the second purchase is going to be owner occupied and you have met the minimum time frames set forth in the mortgage or security document. I do see a problem in purchasing a home and then having to refinance in 30 days. Refinances cost money. In my opinion this would put you in a “have to” situation and if it doesn’t work, you will lose the home. Since the early 1990s, most hard money lenders are only lending about 65% of the home’s value. That way when they foreclose, they will recoup most, if not all, of their investment.
I don’t understand your husband’s problem with not having a credit history. That should not hurt him. It appears like he may have had some earlier problems that are hurting him. You can purchase a house and have never had credit, so lack of a credit history cannot be a factor in a mortgage loan denial. A good loan originator should be able to help him, as long as his previous credit history is good. I have done lots of mortgages when applicants had no credit history, and we did not look at them unfavorably, as it is a form of discrimination.
Problems I see: What is going to happen with the 1st house? Is it going to be sold? If you are upside down in the mortgage, how will you sell it and produce a clear title for the purchasers? An FHA loan is assumable as long as the borrowers qualify with the lender. On a qualifying assumable, the lender can release you from the Note. Be sure to get the written release, have it recorded, and keep the original in a safety deposit box, as this releases you from obligations on the Note.
Go find a good loan originator that works with a reputable mortgage company, bank, savings & loan, etc. Don’t do a hard money loan. In today’s times, if you are low on money, you stand a good chance of losing everyting.
The really hard question - Posted by John Merchant
Posted by John Merchant on January 23, 2009 at 19:41:07:
The question you should be asking yourselves is how would you repay a hard money loan?
Much easier to get one than pay it back so I’d suggest you go very slow on getting a HML that you won’t be able to repay.