Posted by gerald(tx) on July 06, 2003 at 22:32:34:
Since you own the property free and clear, any mortgage would be a first, not a second. A line of credit against the property would also constitute a first lien. Bear in mind that any mortgage is going to involve a ton of expenses in closing; appraisal, title policy, prepaids, fees, fees, fees.
Since you have a good asset and you don’t need that much money, you might want to consider a personal loan thru your bank, offering the property as general collateral. Assuming your credit is good, banks will generally lend around 50%, but you don’t have to pay all the fees associated with a mortgage. Since you probably don’t want a 15 or 30 yr loan anyway, this would probably be your best route. The rate will be a little higher, but wind up being a lot lower than paying mortgage fees.
Having a free and clear property also puts you in the driver’s seat for a lot of creative ways of financing thru your sellers. Put your creative thinking cap on and imagine how you could use your property as a pledge or trade in the transaction.
I am a newbie and I am in need of a little advice. Please Help!!!
I own a property free and clear, appraised value 35K. I need about 20K cash so that I can start my RE investing career. I have found two properties that I want to purchase and both require 5K down. I already have HML’s in place but I need the 10K cash to do the deals. Should I take out a line of credit on the property that I own or should I get a second mortgage on it? Any information that you can provide would be very much appreciated. Thanks in advance.
The fastest solution is to find another HML for a $10,000 loan using the F&C house as security. When the dust settles, use the profit from the other two deals to pay off or pay down the note, or arrange for permanent financing elsewhere when you have more time.
If your credit is O.K. another way that may take slightly longer is to contact Mike Morriengello at www.sunvestinc.com and ask what you have to do to sell a first mortgage note that nets $10,000.