Posted by brad on July 16, 2002 at 09:59:51:
you said most lenders. that is the operative word. find a morgage broker. do you still have savings. nothing persuades a bank more than getting a new customer or loosing an old one. the problem is seasoning issue. the fact that you own it free will get you in at some bank. are the banks saying no up front or are they actually looking at the deal? you are better off getting a construction loan in the beginning so you do not have to kill your savings. but since you are past that how long have you owned the home? are you close to your year? have you tried to pull a smaller amount of money so the bank won’t feel like you are cashing out? you can use the equity without pulling it by subornation of a lean( using the home for a d/p on another home) good luck. i wish you the best.
Ownership of Property - Posted by Val Densmore
Posted by Val Densmore on July 16, 2002 at 09:32:23:
My hubby and I purchased a HUD property in May 2002 for all cash, as is. We thought this was a great deal however, we are having problems obtaining financing, i.e a first mortgage. We have put a lot of money into the property rehabbing it and now we want to rent it out. We have tenants ready to move in, just waiting for the village to ok the certificate of occupancy. The problem is, most lenders want us to own the property at least one year! Why?
We own the property free and clear, we used our savings to rehab the home and the rental income will be 2x the amount of the loan( we are asking for 50k, the monthly rent is 1k. What gives? We have decent credit, no blemishes, debt to income ratio is ok. We are blown away. Any advice on how to finance this property would be greatful. We want to put a mortgage on the home for tax deductible reasons, plus give us cash back to invest in something else and/or replenish our savings.
Thanks in advance.
Re: Ownership of Property - Posted by GL(ON)
Posted by GL(ON) on July 16, 2002 at 11:57:45:
A lot of financial institutions were burned badly a year or 2 ago by flipping scams. Sharpies would buy cheap houses, get a huge mortgage (far more than the property was worth) then walk away and leave the bank holding the bag.
They did this through crooked appraisers and bank employees, and phony appraisals.
Instead of getting at the root of the problem, a lot of banks established a blanket rule of not loaning on a property for a year, if the value is much larger than what the owner paid. Yes it’s dumb, but it’s just one more example of the honest investor getting a bad name and a rotten deal because of some shysters.