How Do I Borrow Above The Purchase Price But Below The Appraised Value In The 1st Year?
I would like to purchase a bank-owned property. The house will likely go for 195K and is appraised at 245K. It needs about 5K in renovations. I would like to finance the purchase price fully and then have a credit line up 10K for the renovations.
I would like to structure an 80% first, 20% second and then bump up the second by 10K once I move in (which is still considerably below the appraised value).
I run into seasoning problems as many lenders will not take appraised value into consideration until I've been in the property for 12 months. They will only consider purchase price for Heloc calculations.
Any ideas on how to do this?
You need to find a good mortgage broker for your area. A good broker will have the type of loans that you are looking at getting. Of course, your credit history and possibly your income would likely be considering factors.
Roger
Da Raz Warrior has spoke and that is the best way to go.
There are others. My feeling in the matter is to make prior arrangements with your bank for 90 day borrowings in the amounts necessary to fund your project.
You start out with an 80% lst and then a 20% second. The fixup whatever should come from a loan created as they say sideways. Pre approved credit at the bank. based on financial statement, mortgages you are having collected in and by the bank. Your good friend with the five maximum CD's who only banks there because you tell him too.
Another way is to have the bank from whence you are buying make the first trust deed loan and by proper documentation of the repairs you are going to do, they give you an overage amount for that purpose. That sum they hold in the bank and dispurse to you as you hand them paid bills and labor releases duely signed by all the parties. Sometimes they will dispurse this sum in five or four equal payments. Thus they have the money in bank, you are paying dutch interest but wot the hell, full financing the dream of the beginning investor.
there are many ways but this is enough. Do not crowd the head too much, cause it may not stick.
Adventuring Lucius
I actually had the same question two days ago and I asked a mortgage guy and what he suggested is, purchase a home as an example for $100K that is worth $200K (this is just an example), on a mortgage which means your mortgage will be on the 100K, than have additional money that you need, say like 50K in home equaty loan with check writting priveledge. This means that you have a 100K mortgage at say 6%, and a 50K loan at may be 4% plus the loan does not count the interest rate until you write a check, which means that if you have a loan of 50K, but you write checks of only 20K, you pay the interest on only the 20K. And when you flip the property or rent it, just cover both payments mortgage and loan.