Posted by Alex (Boulder) on February 09, 2002 at 21:59:05:
nt
Quick question LTV - Posted by ETalbert
Posted by ETalbert on February 09, 2002 at 20:49:42:
I was told, repeatedly, by my realtor and two lending institutions that I could only borrow based on the asking price of the house and not the FMV.
Here is my particular example. I found a house for 150K, comps put it at a FMV of 225K. If I get a 75% LTV loan (Loan = 168K) I could buy the house with no money down and have an extra 18K cash, but the bank says they would lend based on the sale price 150K (Loan would be for 112K)
Is this true?..Or will somebody lend based on FMV?
Thanks for any responses!
ET
Re: Quick question LTV - Posted by Jim Kennedy - Houston, TX
Posted by Jim Kennedy - Houston, TX on February 09, 2002 at 22:54:59:
As Brent_IL has indicated, most “traditional” lenders will base the loan amount on either their appraised value or the purchase price, whichever is lower. You need to find a “non-traditional” lender. One way to fund this deal is by using a hard money lender, aka an asset based lender. Many hard money lenders will base their loan decision on the after repaired value (ARV) of the property.
Some hard money lenders will loan up to 75% of the ARV. Most hard money lenders are probably not going to exceed 65% LTV. IF your numbers are accurate, you shouldn’t have too much trouble finding a source of funding for most, if not all, of the purchase price.
There are two points in your post that are not quite clear. First, you mention a Fair Market Value of $225K. FMV implies the “as is” value. Does this property need any repairs, and, if so, how much will they cost? Second, you mention a price of $150K. Is this the seller’s asking price, aka list price? Or is this the negotiated purchase price?
Hope this helps.
Best of Success!!
Jim Kennedy,
Houston, TX
Most lend on lower of FMV or sale. NTXT - Posted by Brent_IL
Posted by Brent_IL on February 09, 2002 at 21:00:05:
nt
Re: Quick question LTV - Posted by ETalbert
Posted by ETalbert on February 10, 2002 at 18:50:12:
In reply to you questions.
The property is in very good shape. May some minor landscaping.
FMV is the accurate comp for this house and neighborhood. This is the price I would expect to sell it to a retail owner buyer.
150 is the asking price, I’m quite sure I can pack it down to 143K.
Problem here is that my credit is bad and the bank will loan me 75% which leaves a huge down payment.
Hope that answers your questions.
ET
Re: Most lend on lower of FMV or sale. NTXT - Posted by ETalbert
Posted by ETalbert on February 10, 2002 at 18:51:41:
In that case, how soon could I refinance to cash out. i.e. refi at FMV?
ET
Brent - What does “nt” mean? - Posted by Eric
Posted by Eric on February 09, 2002 at 21:25:25:
Brent - in your reply here you only said “nt”. What does that mean?
Re: Quick question LTV - Posted by Jim Kennedy - Houston, TX
Posted by Jim Kennedy - Houston, TX on February 10, 2002 at 22:12:36:
Based on the numbers you’ve given, a hard money loan would definitely be one way to fund this deal. As I indicated in my prior post, most hard money lenders won’t exceed 65% LTV. And a “true” asset based lender won’t care much about your credit. Since the FMV is $225K, 65% LTV would be $146,250. If you can buy the property for less than $146,250, you should be able to fund the deal without having to come up with any down payment.
Keep in mind that a hard money loan should only be considered for relatively short term financing. If you plan on quickly flipping the house to a retail owner occupant buyer, you should be able to pay off the hard money loan before it becomes due.
Hope this helps.
Best of Success!!
Jim Kennedy,
Houston, TX
Re: Most lend on lower of FMV or sale. NTXT - Posted by Brent_IL
Posted by Brent_IL on February 10, 2002 at 21:28:01:
It’s lender by lender. The ones that are worried about seasoning (see archives) now want 12 months. Check out www.sunvestinc.com for access to those that don’t care.
Yep. - Posted by Brent_IL
Posted by Brent_IL on February 10, 2002 at 13:58:18:
Everyone is right; I meant “no text.” When all you have to say fits in the subject line, it’s generally used as a courtesy so the reader doesn’t have to load another page to find that out. They can just go to the next post.
Re: Brent - What does “nt” mean? - Posted by BJ_Al
Posted by BJ_Al on February 09, 2002 at 22:02:13:
I’m not Brent…but, NT means NO TEXT!!