How To Obtain 100% Financing?
I've been on this site for a couple months now and last month purchased my first house (bank foreclosure). I'm a little disgusted that I must have missed some valuable information because I don't seem to be doing things right.
The house I bought is currently assessed at $56,000, it is on a nice residential street and houses in my town usually sell at a fairly good price. I was shocked when the appraisal came in at $29,000! Of course my bankers would only loan me 80%, so I was stuck with trying to come up with cash to close the deal. As a first time purchase, I didn't have any cash. Anyway, I dealt with the cash problem and am now trying to get it ready to sell.
There was another house I looked at, but it needed major work on it- I was very skeptical of whether I could do the work and knew I wouldn't have adequate financing to take care of things. Yesterday when I was at the courthouse, the paperwork came in for the house. It sold for $21,500 and the bank gave a loan for $39,000! WHAT AM I DOING WRONG?? My house was in better condition and in a better neighborhood and I stole it for $26,500- they would only loan me $24,500.
I called my local mortgage broker and asked about giving an appraiser a list of repairs I would be making, to up the appraisal price. She said her lenders did not allow this. She also said I had to put down 20% or 10% if I planned to live there.
I don't know of any hard money lenders in my area, but I'm just very confused at this point about where to get a loan!
Could someone please help me??? I want to try to sell another house, but if I always have to come up with 20% and the appraisers here seem to be bringing in the low appraisals the banks like, I don't see where I have much future in this business.
Doubting my ability....
Kim
Did you try the lenders tab at the top of the page? I just checked for Iowa and there is one on the first page and one on the second page.
Also try typing in Hard money lender in you favorite search engine, normally can find quite a few that way also.
Kim
Congratulations on your first buy. You made the right move.....you took action. The cost of education can be a big part of the real estate investing process. Do not think for a minute that all the stories you read here are not laced with a few bad moves and buys. It's all part of the process.
I would bet that the next house you buy, that you will know the comps and have a lender set up in advance. The appraisal should follow the comps (solds) for the area. Any Realtor can produce the solds for an area. Don't be afraid to provide your own information to the lender. They may or may not consider it however it is worth the effort.
Keep up the good work and you will soon be able to write a book on all the good and bad moves you have made on your road to success.
Best of luck!!
Kim,
You are looking for a rehabb loan. This typr of loan is based on the following: THE ARV. You need to call around and ask if they do rehabb loans. If you qualify you can get up to 90% of the value. Which in most cases is 100% financing. Here is an example:
Sales Price: $27,000
Appraised Value: $19,000.00
After Repair Value: $82,500.00
Contract for work: $50,000.00
Loan based on $50k+27k=77k
Loan amount : 77k*90%=$69,300.00
Interst rate : 15Years fixed: 5.125%
So if this is the type of loan you want . you must call all lenders or brokers in your area to find out who does them.
Good Luck
Lori
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