Posted by John Corey on November 22, 2005 at 09:06:33:
Gerald,
You can do either (family funds or HML). The issue is the refi lender will ask questions about the jump in value or they will work from the as-is value but use a lower LTV. Given your numbers you can still get the refi done.
If you have access to the family funds then you can buy with no point and try to sell. As you note you will jump to plan B if the place does not sell in the 8 weeks you are allowing. They you pay to refi and hold the property as a rental. It will all work (based on the high level and acknowledging that the details matter when you do a specific deal).
I do not know your experience level. It sounds like a deal and something you should pursue. Continue to post questions or send me email. Just be prepared to hold the property if you find the demand is not there or that retail buyers are having problems getting a loan given the recent jump in value (many lenders will look at the price you paid and balk unless 6-12 months have passed; you can not force a retail buyer to use your lender).
There are lenders that will allow cash-out-no-title-seasoning…where you are going to run into a problem is with the appraised value. If you purchase the property for $29K and then want to cash-out 100% to lets say $60K the lender is going to want to know why the property was worth $29K last week and it is now worth $60K. Was it a distressed sale, no-arms legnth transaction,improvements made, etc. Since you are planning on using the cash-out funds for rehab work you can’t document improvements made.
Hard money may be the best way to go…then refi out of the hard money.
Is this 28k down 20% of the loan amount? Although, you may want to think about hard money as most lenders want 3-6 months seasoning. Also, is this property functional right now? Can a person live there? This is something else lenders want before a loan can go through.
If you have anymore questions, don’t hesitate to ask cynthia@skyviewmail.com
Re: Quick question about refi. - Posted by James HArris
Posted by James HArris on November 21, 2005 at 08:29:58:
Gerald, why not just get a hard money loan? To answer your question, although it may be possible to immediately refi your property, you will run into lenders/brokers who will tell you that you will need to be on title at least 3 months or so. Hope this helps.
Posted by Gerald(NC) on November 21, 2005 at 13:03:35:
O.k. first off, I would be using “family” money to completely purchase the home up front. And yes the total price of the home is $27,900.
Why not go hard money? Cuz I would be going without having to pay the closing costs and interest fees involved with HML.
I want to try to sell the home within about 2 months, which should be no problem, for this one home cuz from what I’ve seen it needs nothing but a cleaning. So yes, it can be immediately occupied if someone wanted to move in.
The refi question comes into play, cuz it would allow me to hold onto the home and rent it if I don’t get a buyer within 8 weeks or so, rental will be my plan B exit strategy. And if I did rent it, and refi it, I would you some funds, (not 100% of the value) to purchase/repair other properties.
The property is a forclosed property.
What is the difference in doing a refi from an HML purchase vs. doing a refi from a “cash” purchase?