What Type Mortgage Do I Need?

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Buying a house that needs some work – worth $ 650k in great shape – contract for $ 429k. Thinking VA, but the limit is $ 417k. Have a high DTI, but good income (including self-employed and rentals). The mortgage will be cheaper than the rent on the house (already living there). What type of mortgage would be easiest to get into? Have a 713 middle credit score and possibly 5% down if necessary. Can I get a hard money loan and then refi it for renovations?

Recently closed on a home for $ 20,000 (terrible condition)
Put in $ 10,000 in renovations (practically a brand new home now)
My guesstimate is the house is worth between $ 65,000 and $ 100,000 in today’s market

I want to ‘refinance’ so that I can pay off this mortgage and use the extra money to purchase another house for approximately the same price including renovations and I want to rent out the second house. I would get around $ 1,000 to $ 1,200 per month off the rental of a similar home…

Is it possible to take a new home equity loan so soon? Are they stricter on refinancing? What would I have to be careful with? Any experiences?

Thanks for all answers!

4 Comments
  1. Reply
    ang l
    January 23, 2011 at 1:06 am

    put as much down as you possible can and leave some for fixing up. you say you have 5percent down that is more that $ 20000 so you have enough for the VA limit. good luck

  2. Reply
    linkus86
    January 23, 2011 at 1:17 am

    I think you are on the right track with the idea of a hard money loan first and from there opt to refinance for renovations or get a HELOC.

  3. Reply
    Ed Atun
    January 23, 2011 at 1:59 am

    . It’s the fix up that makes this difficult. VA will not let you buy it unless it is all fixed up. If it were all fixed, the seller would be selling it for $ 650,000. You know that.
    You should always pay cash for fixups. Then refi when it is beautiful. 2 hard money lenders in Phoenix were in the newspaper. They didn’t show up with the money on closing day for lots of buyers. The buyers were shocked. THey had agreed to pay 18% interest in return for the cash. Now they will lose their earnest money if they don’t find cash in 24 hours.

  4. Reply
    Woof
    January 23, 2011 at 2:16 am

    Possible? Yes. Likely? No. For starters, the lender would certainly require an appraisal to see if you’ve even GOT positive equity. What you seek is NOT a HELOC; what you seek is a refinancing with cash out.

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