Newbie - Questions on Financing - Posted by C.A. Smith

Posted by Felix on December 23, 2003 at 06:49:33:

I’ve never paid upfront, EVER, for a mortgage broker, the very concept is silly… to me anyway.

Would you go into a bank and pay an upfront fee for a signature loan? pay a car dealer up front to look at his lot?

Newbie - Questions on Financing - Posted by C.A. Smith

Posted by C.A. Smith on December 22, 2003 at 15:46:57:

I am looking at property that has an assessed value of $50K and the current asking price of the property is $35K. If I get 75% LTV my loan is around $37500. My question is if I put in the offer at $35K will the mortage company require me to take the loan at 75% of $35K?

Re: Newbie - Questions on Financing - Posted by Felix

Posted by Felix on December 22, 2003 at 19:07:06:

NO WAY! Especially upfront. Tell him that you are interviewing him, not vs. versa. Tell him you’ll let him try to get you a loan, but it will cost him $250 up front (non-refundable).

Re: Newbie - Questions on Financing - Posted by Tony Siqueido

Posted by Tony Siqueido on December 22, 2003 at 17:19:43:

most lenders will detemine LTV based on sales price. lenders usually use the lower between sales price and appraised value.
Hope this helps—keep checking and asking—there may be a way around situation if needed
Sincerely
Tony Siqueido

Re: Newbie - Questions on Financing - Posted by Paul C

Posted by Paul C on December 22, 2003 at 15:57:04:

If you are referring to Hard Money Lenders they typically lend 70% of FMV so if the FMV is 50K then they would lend 35k

Re: Newbie - Questions on Financing - Posted by Mark Williams

Posted by Mark Williams on December 22, 2003 at 21:44:13:

Felix:

You must be offering tongue-in-cheek advice?

Some minor investigation will likely indicate that your info is incorrect.

Mark

Re: Newbie - Questions on Financing - Posted by Mark Williams

Posted by Mark Williams on December 22, 2003 at 21:56:46:

With conventional lenders, the LTV being offered is, as Tony says, applied to the lower of the purchase price or the appraised value in order to determine the actual loan amount that will be offered.

While that is standard throughout conventional lending, there ARE other lenders who will do an IMMEDIATE, NO SEASON, CASH OUT refi, based on APPRAISED value, (typically requiring a 620 FICO, full doc) to 95 LTV on a pri res and to 80 LTV on an NOO.

But you’re going to incur another round of closing costs (and a prepayment penalty on the first, unless you strategized ahead of time to make sure that you didn’t HAVE a prepay on the first…) which makes it expensive money, but that CAN be worthwhile in some deals if the spread between your purchase price and the appraised value is great enough to capture sufficient cash on refi to do another deal…then it’s just a cost of doing business.

(this particular deal certainly doesn’t present those characteristics, but another deal in the future might, so keep the concept in mind–I’d be happy to talk with you about it)…

It’s also worth noting that if you’re making a purchase whose mortgage will be under 50k, your choice of lenders will be restricted…many conventional lenders won’t write a mortgage for less than 50 (fewer still if you’re talking about an NOO property.)

Hope that helps?

Mark