Posted by Ed Garcia on January 22, 2001 at 11:16:03:
Karen,
It appears that you have good credit. Why don’t you go to a small local bank and explain to them that you are purchasing a property below market value as a fix up and want to borrow the money and fix up money to do so. Tell them that you would like to treat it some what like a construction loan where they can appraise it in it’s current condition, as well as full market condition, after the completion of the improvements.
Now Karen you’re going to have to demonstrate to them that you know what you’re doing. Have comps available of full market values in the area on properties with no or little differed maintenance. Also show them the costs break down, of the work to be done.
We have gotten a pre-approval from a hard money lender. FICO scores are high 600’s low 700’s. Have just heard of a credit line that is prime plus 2 points. We hope to re-hab, refinance, and rent out. Will having the hard money lender check my credit and then for this line of credit run a credit report, inhibit my ability to get a re-finance 3 or 4 months down the road? Any assistance would be appreciated. Thank you.
Karen in FL
Posted by Ed Garcia on January 22, 2001 at 09:31:54:
Karen,
With your credit scores you don’t need to go Hard Money. By the way Karen, Hard Money lenders don’t usually make a fuss over your credit because they lend against the value or equity of the property. When the lender checks out your credit, you will lose 3 to 5 points off your credit score, however after your new loan is approved and funded, you will show paying off the Hard Money loan and that should bring your credit score back a few points also. Isn’t it a shame that we have to concerned about a credit score and not how well we pay our debts?
The reason for the hard money was to be able to finance after repaired value up to 70% LTV. This would include the money for repairs. Do you have any other suggestions I might follow. Is the Line of Credit a good alternative? Thanks Karen in FL