Posted by GMann on May 11, 2003 at 08:51:29:
Overall I think his criticisms of the Sheets program is just. It appears as if he only has an author?s perspective on mortgages and not one of a mortgage professional.
There are some ligit programs out there for 100% financing for investment property but they are few and far between. Conventional financing does not allow 100% financing on investment property and requires 10% down with sourced and seasoned funds. The programs that allow 100% are either an Alt-A program (80% 1st & high interest 20% 2nd) or a sub-prime 75-80% 1st with a 20-25% seller second. Some hard money lenders don’t care about 2nds behind them, but they are usually limited to 65% loan to values for the 1st mortgage.
I just read the scariest post - Posted by Phil Pelletier
Posted by Phil Pelletier on May 11, 2003 at 03:09:47:
I recently began considering the purchase of some rental properties with 100% financing (80% first, high interest 20% second), or possibly a motivated seller willing to carry a 20% junior mortgage. I intend to apply some of the Charlton Sheets stuff (not all of it, but some of the more straight forward stuff). Then I read this post
It was facinating. It flew in the face of everything I have read about buying Real Estate with no money down. One thing this person (johntreed) says is the seller carry back is not allowed when applying for an institutional loan. Is this true and correct? Will I be asked to lie on the application if I get involved in a seller carryback situation? Help me make some sense of this post. It is well written, clear and actually quite scary regarding some of my goals. It is also very long (many links taking you to other articles to support his point). It is worth the read though, if only for an opposing view.
Let me know what you folks think of the article on that link.
Re: I just read the scariest post - Posted by Chuck
Posted by Chuck on May 27, 2003 at 09:38:19:
Let me cut through the junk for ya…
If you are not lying, don’t worry about it! I’ve been a Loan Officer for 10+ years. If you have a seller that will take back a second, a bunch of lenders will work with this. Just don’t tell the lender that the seller is taking back a second that is forgiven after closing. I know LO’s that do this, but it’s a little too risky for me, because it is LOAN FRAUD. The simple question to ask yourself is:
Will one bad decision to lie to a lender ruin me later? Chances are that it won’t, but are you willing to take a chance?
No loan fraud, no problem.
Re: I just read the scariest post - Posted by dell
Posted by dell on May 11, 2003 at 17:32:23:
John T Reed has some good and valuable information, you just dont want to spend too much time at his web site or you may get so depressed that you will quit real estate.
I dont know what is “typical” if there is such a thing. The most important thing is tell your banker what you want to do and ask him if you can. You may want to ask a couple commercial lenders. This should take the mystery out of the situation quickly.
I know it is possible to do with the right lender. We are always up front with our lender and have done a couple cpommercial deals with owner carrying the downpayment.
We are closing this Friday on a building with 15 apts and 12,500 sq ft on retail space. The purchase price of the building $180,00 + $60,000 in renovation costs which will be wrapped into the loan. Bank financing @4.25% The owner is carrying 10% down payment at 6%, interest only, balloon in 5 years.
This is one example to give you a sense of what we do. We have a relatively aggressive banker we deal with. I don’t know what is common with others. We have purchased 9 properties since Jan. All were 100% owner and or bank financed. With 100% bank financing we used equity in other properties as our down payment so we didnt have to come up with cash.