Posted by Dimpil on October 24, 2003 at 05:45:41:
As far as I know traditional lenders go off purchase price and hard money lenders go off fair market value or appraised value.
Mortgage Financing - Posted by Brandon
Posted by Brandon on October 23, 2003 at 16:09:39:
I’ve seen in the C.S. courses and other materials where they say (repeatedly) that lendors will use the value of the home to determine how much they’ll lend instead of the purchase price. How do you find these lendors? I used to be in the mortgage business and even when talking to lendors since then, they want to lend off the purchase price. The reason is that they don’t WANT you to be in the home with no money down. It’s a greater risk for them, because the borrower doesn’t have a vested interest in the property.
For instance, let’s say that I find a $100k home that needs some fix-up work and I can buy it for $60k. I may have to invest $20k to get the home back in market condition, but I’d still have $20k in equity. According to Carleton, I can get a loan for $80k (which is only 80% loan-to-value) to cover the cost of purchase and fix-up. I haven’t found lendors willing to do this. They want to base the loan off the $60k sales price, which means I have to come up with the $20k to fix up the home myself. Anyone else know of any resources? I live in St. Louis, Missouri.
Re: Mortgage Financing - Posted by Ed Garcia
Posted by Ed Garcia on October 24, 2003 at 10:05:58:
Brandon,
The lender that you?re hearing about is a Hard Money Lender. This is private sector money or private investor money.
Another lender that can do it is a bank. Many investors get confused and think that a mortgage company is a bank. Banks and Mortgage Companies alike will tell you that they will finance about 80% of appraised value or purchase price, which is ever lower.
This is the first rule we can get a bank to change if we structure our deal right and have a relationship with a bank. We can also get banks to do 100% financing if we know what we?re doing.
Ed Garcia