Purchase With Cash Then Refinance?
Does anyone know if I can do this scenario:
1. buy a house at below market value for the neighborhood, paying cash for the purchase and closing
2. renovate the house, paying cash for the cost of renovation
3. after some time (ASAP) refinance with cash-out. the cash-out should cover the purchase price, closing costs (for purchase AND refi), plus the cost of renovation. The appraised value should cover all of this.
Is this allowed? Is this allowed in Baltimore, MD? If it is possible, what percentage of the appraised value would we be able to cash out (80%, 95%, 100%, 105%, etc.)? Will the amount that I can cash out be based on appraisal at the time of purchase or on an appraisal after all the renovation work is done? Is there a period of time that I have to wait after purchasing the property before I can refinance ("seasoning"
?
-ed
Yes you can do it. Amount you can refinance would depend on your credit etc. Seasoning would depend on where you get the loan. Some require seasoning some don't, shop around.
If you want to go the financing route look into a FHA 203K loan. They will borrow money to purchase and rehab. The bank will release rehab funds after rehab is completed in as many as five installments. With a 20% downpayment and a respectable credit report you can do this.
If paying all green cash for a property you may want to work on wholesaling property. Find a sweet deal, buy and turn it over to a rehabber at 65-75% of value.
Make 10%? Do it again...
I have been doing that for the last couple of years. I have never had a problem with interest rate, ltv, or seasoning. I can usually buy and have house fixed and refinanced in 90 days. I also go for a fannie mae loan. so I keep the ltv at 80%, this way I don't have to escrow taxes and insurance. Right now I only have two Mortgages with a fixed rate of 6.125% (30years) and 4.375% (15years)
I have many real estate investing friends and we all do what you do never had a problem. The problem comes in when you have to go stated, no doc, or lite doc. Then everything you said becomes an issue
Lori
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what does 'stated' mean when refering to a loan ? like 'no doc', etc.
JonDoe....
"Stated" means you state your income when doing a loan app, without having to verify it. No W2s, pay stubs, etc. are required.
Quote:
On 2004-02-06 10:34, mcole wrote:
JonDoe....
"Stated" means you state your income when doing a loan app, without having to verify it. No W2s, pay stubs, etc. are required.
Stated means you state the income,BUT your job will be verified
No Doc means the same thing, there are a few lenders that have a True No Doc but very few people qualify for them anymore
Lori
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