Can I (Should I) Buy A Foreclosure While In Debt?
Hi,
I have been posting on the other board about ideas to clean up my current credit situation. But, I thought maybe someone here might have an idea with my current situation of how I can turn this into buying a new home.
I currently live in so cal (Valencia) in a condo appraised at about 185K that I owe 123K on. I have unsecured CC debt at about 28K. My interest on my mortgage is 8% with a pre pay of 5K that will not go away until May 2005 (of course that is tax deductible so am not too upset...). My Credit Score is a bad 555 as I had several old unpaid bills (now paid but still not cleared off the report) and have been on a debt consolidator which really kicked it down.
I have been considering just refinancing where I can get about 6.5% in my situation, take out just about enough cash to pay the whole debt off and thats that.
BUT...I really have been interested in buying another property either for flipping or just holding onto for equity purposes. I don't make a lot of money but also have available co-signers that could help in getting better finance deals, I would think. If there was some way I could turn my current financial situation into buying a foreclosure or something I would love to try that primarily since that is my goal.
So, just thought I would ask for some ideas as I have to make a deccision soon.
Thanks!
Well that depends,
I'm in a similar situation, 570 credit score, paying off some old bills, not increasing credit score fast, in debt 5 figures,
If I found a deal that I knew was a winner with a large enough margin to be as completely safe then I would do it. Then use part of the money to pay down the debt and use the rest to invest more. Working a job will not allow you to pay off 28k easily unless your job pays Very well.
I've looked at everything out there. REI is the best way of making money in the short and long term.
Don't rush it though. Be sure before you possibly ruin someone elses credit.
P.S. I don't do co-sign, I would rather give the money away than co-sign. You can ruin your name and credit pretty quick.
Thanks Arm,
I may just use a very old friend who does loans, take out the cash for the pay off and at least have no more debt (outside of the mortgage), reduce my overall mortgage interest and just wait awhile until I build up more equity. I hate waiting on one hand as every month I look, the homes here in So Cal are up about 10 grand! I really wanted to get in while I could but I think the smartest is to be happy that I own and have enough equity to kill the debt. Then I'll be debt free. I know many people don't recomend tying unsecured debt to your home, but my monthly will actually go down it seems and I can tackle that.
Besides, the current lender I have is not pulling off my PMI because in one year I had one late payment. So, I am kicking down an extra 100 dollars a month just for that and am looking to move on....
I'll start reading about foreclosures too while I'm at it...
TheRanchHand
Refi FHA Rate and Term, they have no fico requirements your numbers indicate about a 62% ltv this is a no brainer for an underwriter, you should get about mid to low fives int. on 30 yr fixed and FHAs ARM is very good and they (FHA) have just approved hybred ARMs 1-1, 3-1, 5-1, 7-1, 10-1. I'm in So. Cal. e-mail me if I can help get you started. I'll bet the pmt. svgs. will offset the prepay. **Please See My Profile**
no venture no gain, every one has there own risk level, just plan well and be ready for the opportunity when it comes,
by the way try not to be late on any payments at all
You know what is great about real estate? You don't need a lot of money or a great credit score to buy and sell houses. I'm going to tell you exactly what you should do my friend.
First, refinance & get rid of that aweful 8% rate. You should have done that a long time ago when they were just stupid low.
Second, with the money you get from the refi pay your crap off. I got my mother to do that. She paid off all of her debt with a refi and freed up close to $800 per month.
Now, with all of that taken care of you need to look towards getting some extra cash in your hands. The best way to do that is wholesaling. I've done three wholesales and got 15K for them total. Like an idiot I blew the money on stupid crap instead of re-investing it. I suggest you do that since you no longer have any debt (cause you paid it off). And if you do have debt, pay it off. No better feeling than being debt free.
Once you get a few wholesales under your belt and cash in hand go for something else. Don't buy rentals. They suck. If you're not doing multi-family (duplex or apartment complex) then being a landlord is a waste of time and money. I would say do subject to and/or lease options. I'm doing lease options just because it's easier for me. I've done a few sub2 deals but they just didn't jive with me. You'll figure out what you like best and stick with it. The great thing about those methods is it is the same as rentals only different. What I mean is, you get cash flow, a down payment (a nice one mind you) and then you sell the biatch for a nice healthy back end a few months later. AND! You never had to unclog a toilet!
Anyway, that's how I would do it. But your not me. Do what you want. Just make some money.
Peace,
Mitchell
Thanks for that! It makes sense. Though I have yet to understand all the real estate selling terms, I am ready to get a grip on it. It seems that the refi deals I have seen so far, I am knocking around $700 or so off a month of my bills which is about exactly the over pay that got me in trouble.
Once I pay off the debt, I'll still have the 80/20 loan to value balance to keep me off PMI. I hope in about 6 months I'll have saved enough money and learned the ideas of RE investing to try it out.
I had not yet heard that renting could be such a pain. I was considering of renting this place out and buying another place to live in, but maybe there s a better way. I'll research the meanings of all the Lease Options you spoke of and see what it entails, etc. I am just about to take my State license for Real Estate Appraising so I am getting into the field pretty deep.
Thanks again!