Posted by Don (VA) on July 29, 2007 at 13:50:34:
My suggestion: Don’t proceed with your offer until you do know. I’d hate to say the lender is right in this case…for me, personally, it’d be like praising George W. Bush for his management of the war in Iraq, but that’s a different subject…but you have to know what your strategy is.
If your strategy is to buy the place and live in it, fine. But, just as with any other property, can you afford it? Can you get financing for it?
If your strategy is to buy it, fix it up, and resell it, again, you need to know where your money (for the purchase and the rehab) is going to come from. YOU need to know this.
So, it you’re planning on living there, get pre-approved with some lender. (Maybe even the lender of the property itself…?) If you can buy it enough under market, a hard money lender is a possibility. You can get a pre-approval letter from them, then show it to the lender of the property you want to buy.
But the point is: First, you need to know your own strategy. Then you determine whether the numbers make sense, and whether you, or someone else, finds the structure appealing enough to go ahead.