Thanks for the response. Yes Stacy, u did understand the ?. I just wanted to know if I could secure financing before closing on a house. It wouldn’t be good to sign an offer sheet, give up some escrow money, and not be able to get any financing. I figured I’d ask here instead of calling a lender and adding yet another inquiry to my credit report. Paul, thx for pointing out the mortgage broker. I
thought the HM lenders and the brokers were the same. When I look in the phone book and see those ads, “Bad credit, no credit loans, etc on property”, I thought they were all in the same group. Are these the people I should be dealing w/? Thanks.
Any other suggestions for a newbie starting out would be great. Thx.
I have bad credit, and have been at my job for a year & half. If I find a property, REO or a “normal” single family house, or whatever pops up, can I get a hard money lender to approve a loan for me in advance? I.e. I find a house worth $50k, existing mortgage is $10k, seller wants $20k cash…could I get an approval for $20k at this point? Or would I have to have the deed before they even think about someone like me? I can deal w/ the 15% rates, if it’ll get my foot in the door. I’m thinking that if I can get a loan somehow approved before I go to closing, then I can have the title co. dish out the down payment, closing costs, etc w/ the money from the loan. I don’t have much money to use of my own, and it wouldn’t even pay the closing costs on a cheapo home.
Can this be done? Any advice/suggestions are welcome. Thanks!
Re: Hard money lending question - Posted by Paul Macdonald
Posted by Paul Macdonald on November 24, 1998 at 18:14:23:
If your credit is truely horrible and you have to go to a hard money lender it would not help to go in advance. A hard money loan is made against the property.
Your only purpose as far as the HM lender is concerned is its your signature that lets them make the big bucks or take the house.
Go to a broker with a broad range of products. Have the loan officer pull your credit, tell you what you’ll need to get a mortgage. HM loans in my area max out at 65% LTV. A “D” credit lender will make anyone a loan at 65%… and the rates will be much better.
Find a good broker. It’s worth the time… “cheap at twice the price!”
You can also do this as a note deal at better rates or terms than a hard money lender. As long as the ITV is in the 80% or less range you can pocket cash and have it as a first or second. Seconds will be a little higher rate.
If the house is for you to live in I would suggest getting with a good loan broker and review your file. Many lenders concentrate only on what has happened in the last 2 years. Pay your utilities and rent on time in the recent past and you probably can get that loan.
Re: Hard money lending question - Posted by Stacy (AZ)
Posted by Stacy (AZ) on November 24, 1998 at 13:27:51:
Sedg-
I think I know what you are asking…
If you find a property that you can get for 60% or less of current FMV, put it under contract with a contingency that your financing goes through. Then you can get with the Hard Money lender. If, for some reason the financing doesn’t go through, the contract is void. It would be best to talk to the hard money lender before placing the property under contract to verify he’d be willing to lend on it. No, you don’t need the deed first…that’s what the lender is giving you money to buy.
The normal process for this is to get the loan approved, and the money gets exchanged at closing. In your example, if the lender agrees to loan you 60% of the FMV of 50K, 10K goes to pay-off the first mtg, 20K goes to the seller, and the deed goes to you. Or were you saying the “sales price” is 20K? If that’s true, 10K to pay off mtg, 10K to the seller, and any excess goes to you at closing.