Ed Help (Long Term Financing fell through) - Posted by Stew (NE)

Posted by JohnBoy on October 30, 2000 at 24:28:23:

If your credit is good I don’t see where this should be a problem getting refinanced.

Worst case senerio, instead of losing $10k, why not take a $10k hit by leaving that much invested into the property instead?

If you can’t get a 90% LTV as a non-owner occ, then go for a lower LTV and use some of the CD money to buy down the loan to get a lower LTV.

If you borrowed $90k for a new first, that would put you at a 74% LTV. That would take care of the $75k first and the $15k second. Use the $20k you have in CD’s to buy down the difference. Then sell with owner financing on contract for deed getting $10k down. You get half your CD money back and create a nice spread on the payments every month with a nice payday on the back end when your buyer refinances in a couple of years. Since you’re selling on terms you could sell for around $130k - $135k with $10k down, no qualifying at 11% - 12% interest.

Or instead of using the whole $20k in CD’s, use $10k of it to borrow $100k which will put you at 82% LTV. Then get the $10k back from your buyer and your even with getting your cash back and keep a nice monthly spread each month with a decent payday when your buyer refi’s in a couple of years.

I wouldn’t just bite the bullet on this one and take a $10k loss when you don’t have to!

Ed Help (Long Term Financing fell through) - Posted by Stew (NE)

Posted by Stew (NE) on October 29, 2000 at 16:54:50:

I need money or ideas within the next 45 days. I got a house from foreclosure by buying the second at a discount. My mortgage broker found a bank to put up the funds for the first on a 90 day note. Well, I fixed the house up and tried Lease Purchase, Straight rent, and Straight Purchase. I have had one couple sign a Lease Purchase, but then not come up with the $5K option. They had credit scores of 515 and 530. I had another couple who had better scores but then discovered they could qualify for a new house, so my broker helped them (I understand Business is Business). About a month ago I decided I had better turn this in to long term financing. We started the process with IndyMac. After a couple of weeks of asking me for everthing in the world they turned me down because 1. (They thought I was a real estate agent, I have a company name I use to keep my business expense seperate from my home ones. I do have another rental property) and 2. They thought I was trying to sell the house. My broker put this in as a refinance, but on the appraiser picture he left the FSBO sign up). I am retired Air Force with a pension and a computer programmer and my wife is a nurse. I don’t have a lot of debt. But with the rental and this house the ratio climbs to around 40% for a NOO. I owe my local bank 35K (Due Oct 27th) They are holding 20K of CD’s and a 15K second on my rental. The first is owed 75K and has agreed to extend me out another 60 days til Dec 12th. The house is appraisd at 122K and I am in it for 110K. I can overnight any information you need. My emotions are started to kick in I am about ready to take a loss on everything, Sell it for 100K and lose 10K to keep my credit scores up. Should I just do that and call it a very expensive seminar.

Re: Ed Help (Long Term Financing fell through) - Posted by Ed Garcia

Posted by Ed Garcia on October 31, 2000 at 10:11:31:


The sad part about your problem is that when you purchased the second, you automatically inherit the first. You don’t have to pay them off. You’re considered a junior lien. You talk about your debt ratio being 40% but you give me the feeling that the house in question is not rented which would put your debt ratios in line. My suggestion is to call Neal Johnson at 909-944-0199 to get on a re-fi right a way. I will have Neal e-mail you in the mean time for follow up. I think the advice to re-fi is obvious. I don’t think you should panic. Believe it or not Stew, this all comes with the territory of being an investor and also being a problem solver.

Yes you’re tight on equity, but I agree with JohnBoy, there is no reason to throw in the towel.

Ed Garcia