2nd mortgages and Lender Rules? - Posted by Monique

Real Estate Investing Real Estate Financing
1

Posted by David Alexander on April 23, 2000 at 22:04:06:

I’m not one up on Loans, I leave that to the mortgage brokers. Your mortgage broker could tell you what Your buyer could get once they know specifics.

David Alexander

2

2nd mortgages and Lender Rules? - Posted by Monique

Posted by Monique on April 22, 2000 at 16:39:35:

We’ve got a house for sale at $130,000 and we’d be willing to take back a 2nd mortgage to keep the 1st at 90% LTV. Are conventional lenders more interested in keeping LTV low or having a sizeable downpayment from the buyer?

We’ve had several buyers call with only $5k to put down. If a buyer puts down $5k, a 1st loan is originated at 90% LTV for $117,000, and we take back a 2nd for $8k, will this fly with conventional lending rules? Or, are conventional lenders more concerned that they buyer put up the entire $13k to ensure that the buyer has enough skin in the game?

I’m assuming that unlike conventional lenders, most portfolio lenders (or note buyers) only care about LTV.

Thanks in advance!
Monique

3

Re: 2nd mortgages and Lender Rules? - Posted by David Alexander

Posted by David Alexander on April 22, 2000 at 20:50:30:

Note Buyers, Institutional Investors care more about LTV and ITV as you said. They dont have any mortgage insurance to cover them on that portion above the 80% mark.

They still look a the payors though.

On the other hand banks look at the payors each and everyone of them individually. I would suggest taking your buyers to a mortgage broker and maybe having them look at FHA with so little down. Otherwise with So little down I wouldnt want them in my 130k house, with me holding the second. I’d keep looking.

David Alexander

4

Would FHA do this deal … ? - Posted by Monique (messerb)

Posted by Monique (messerb) on April 23, 2000 at 08:40:08:

David,

Thanks for your response! It clears up that LTV/ITV is more important to portfolio lenders and note buyers.

On our $130K house, the margins are such that we can take back the $8,000 2nd mortgage and still do well – as long as we get cash for a new 90% loan, or $117,000. My question is would FHA (or any conventional lender) do this loan if the buyer’s credit only warrants a 10% down loan, not a 3% down loan? That is, the buyer only has $5K to put down, and we take back the 2nd to get the LTV to 90%.

Monique