Financing Challenge For A Triplex In NJ
We got a deal (we will buy & hold) - we offered $320,000 to the seller on a 3-family house whose value would be $360k to $420k, and he accepted. Since we don't have much to put down (only 5%), our real estate agent structured the contract stating the purchase price be $339,200 and the seller is contributing the amount of $19,200 to us as closing costs. In this way, the closing cost can be financed, he said.
When the contract is under lawyers' review, we started looking for the finance. A mortgage broker referred by the agent said we could go with the FHA loan program, but she evades us by not giving us a specific rate.
Considering that even if we go with FHA, the mortgage insurance we will have to pay at the closing will be more than $4k, we called other sources to find what kind of loans & rates we can get. However, we found a pretty frustrating fact - all the conventional loan programs would require at least 20% down payment for a triplex. The percentage could have been 5 if it were a 2-family house.
One mortgage banker who thought we are buying a single family even agreed to give us the loan at very low rate given both of us have excellent credits and sufficient income. When I corrected him that it's a triplex, he said he couldn't do it 'cause it's a rule for any conventional loan.
All right, if that's case, we cannot go with any conforming loan programs. Aren't there any non-Freddie Mac or non-Fannie Mae loans that we can possibly get? It would be painful if hard money lenders are the only resort. Any suggestions?
credit
income
ltv
down payment
possible owner assist
As i see it you have a lot of options. This will be an OO property and under five units which makes it residential. Jersey has a few rules but they have primarely to do with refi cash out which by the way have been changing.
Who ever is changing their mind at the end may be doing so out of lack of information. All things being equal i work with several banks that will fund this deal. Remember it all has to do with the above mentioned elements.
Oh my gosh, i am so excited! Did you call Washington Mutual? They have the Option ARM loan with 5% down , the absolute minimum closing cost and a really neat product for this type of property. If you choose the Interest only option and add alittle to the principal easch month you willl have such a low payment compared to P and i. if you ever get nervous about the rates going up you can always refi to a fixed interest only later on. i have an Option ARM now and i have a 3.6% rate for a payment of $516.00 on $170,000 loan and no negative ammortization, ever! i can add $500.00 per month to the principal and still come out better than a conventional P and I loan.[ Edited by rebeccabrumbelow on Date 08/17/2004 ]
Thank you both very much! Especially Rebecca - I called Washington Mutual today, and they DO offer such a wonderful program. I can't be more grateful for your tips!!!