Second Mortgage - Posted by Rick

Posted by Rick on October 25, 2000 at 24:14:34:


Thank you for responding. I had a feeling I was forgetting something. I live in CA. With the first on the house, we still owe 130k. (original price 128.5k, plus fees). As far as the debt, I can understand their reluctance since I do know that many fall right back into debt. What we’re looking to do is to pay off 4 cards (cancelling 3), pay off a car loan, and use the rest to pay off back-taxes. So debt problems after the fact won’t be an issue. This would actually end up saving me anywhere from 700-1200 worth of payments a month.

The broker called today and wanted us to order a drive-by appraisal (He’s in orange county, I’m in Sacramento county). I told him I ran comps for the area and could point him to the website I used. He said that wasn’t good enough. I know from posts on this site that appraisals are just one guys opinion, and like economists, you get three in a room and you get three different opinions. lol

I do have another question. When my wife talked to him today, I had her ask him to fax us our credit report he ran. He told her basically, “it was against the rules for a broker to provide us a copy”. (I’m paraphrasing.) I don’t think that sounds right. In fact I know that we’re eligible to receive a free copy if we are turned down for credit. Does this qualify? Or is he just afraid that he might lose our business once we get our report on his nickel? (I would have paid for it).

I appreciate your feedback.

Second Mortgage - Posted by Rick

Posted by Rick on October 23, 2000 at 20:24:06:

Ed (or anyone else nice enough to post) :slight_smile:

I’m finding myself in a kind of frustrating situation. I’m fairly new to real estate investing and have been reading the CRE board regularly for the past month.

My frustration lies in what I percieve to be lenders inability to think “out of the box”. I’m sitting here wondering how I can get financing for future deals when I can’t even get a simple second mortgage on my own home without pulling teeth. How am I supposed to do creative deals when I can’t do one close to home?

Here’s the situation: First home, bought at $128,500, been in here a year in November. I’ve run recent comps in this area and found them between $136k to $143k. (giving us about 10k in equity). Trying to get a 35k loan to consolidate bills. My credit is Ok, but not terrific. (gonna ask mortgage broker to fax over recent copy of CR). He says he’s trying to find a lender, but they all are saying “too high debt to income ratio”. Same story I heard when I bought this place. Been there, done that, bought the house anyway. It amazes me how a consolidation loan would cut my payments to one third of what I’m paying now, yet they seem to think I can’t pay back what I’m already doing and have been doing. Making regular timely payments on “all this debt”. I make good money, but not enough to pay anything off at once.

I’m self employed and make a decent living year after year. I had a poor showing year in 98, but can substantiate that it was an anomoly. Trying to get the broker to use a yr. 2000 P&L. Because of this, he’s talking about using my wife’s income as the primary (even though she makes half as much) and giving us a 16% interest rate. (ouch!)

Judging from some of these posts in the past, I suppose I can live with that since I plan on taking it as a 15 yr. loan and paying it off in under 4. But, there has got to be a better deal out there. I’m off my rocker here?

Ed, I trust the validity of your advice. What should I do? Keep searching? (we really don’t want to drag this out over months) or bite the bullet?

Thanks in advance for feedback. Sorry if this was long.

Re: Second Mortgage - Posted by Ed Garcia

Posted by Ed Garcia on October 24, 2000 at 10:12:47:


In your haste to tell me your story, you didn’t tell me what state you’re in. You also don’t say what you owe on the house so that I can figure out what LTV you’ll be at. When you say that lenders can’t think out of the box, it’s true, but then again, they’re not suppose too. Although lenders make consolidation loans, they feel you are pyramiding your credit. They feel that when they pay off your credit card debt, you still have the credit cards and can easily get back into debt. In most cases, that’s exactly what people do. So when you say been there, done that, that’s exactly how they feel.

Rick, at 16%, you can go anywhere. Your broker is not doing you any favors. I think you can beat the rate, but then again I don’t have all of the information. I know based on what you’ve said in your post that the lender indicated a budget problem. What I don’t know is after the consolidating, are you still showing a budget problem.

Rick, off the top of my head, you can go directly to Beneficial Finance, Household Finance, American General Finance, Associates Finance, and you don’t need a broker to run up the points. In most cases I think you can get about 13 to14% or better, depending on how good of a salesman you are. There are many lenders that can give you a better rate, but then more than likely it would take a broker to get it for you. You don’t need a broker to get you 16%. If you showed income in a conforming way, then of course you could go to the bank.

I hope this sheds some light and will give you some other alternatives.

Ed Garcia