Investing in ...Real estate: how to get a loan

[STR8UP]

http://www.quickenloans.com/mortgage/articles/no-doc-loans.html?QLS=MLP_trusfeed.0000000222

The thing you have to remember, is that everything is a tradeoff.

Someone who loans you money wants to secure their investment.

If you are lacking one thing, such as income as you are saying, the lender is likely to want to see other things to make them feel better. Things such as; good credit, a higher downpayment, a high net worth, etc.

You have to learn to utilize your resources.

You could sit here and say all day long "But I don't have this and I don't have that" but fact of the matter is, lots of people start with nothing. They just don't hit a roadblock and turn back, they find an alternate route and continue forward.

 

[Francisco d'Anconia]

Originally posted by al77
Oh...below 5% and without PMI?
Could you hint where I shoudl look for such loans?

Understand that the only reason people have to pay PMI is because the home has not had 20% of it's cost paid. How do you avoid PMI? Make sure that 20% of the cost of the home is paid. It does not need to be paid out of your pocket, it can be paid with a second mortgage.

What type of mortgage is usually less that 5%? Interest only mortgages. Why do you want an interest only mortgage? The interest is deductible.

What do you get when you get both a primary and secondary mortgage? 100% down payment. Deduct all of the interest payments and take the money that you save by not paying the principle and put it in a tax free, fully liquid interest bearing account that has a return greater than your interest percentage.

Result? You are making money, you have an asset, you have a tax write off and you have liquid funds. What you have is the power of OPM (Other People's Money). That is how all banks operate and make money.

 

[STR8UP]

Originally posted by Francisco d'Anconia
Understand that the only reason people have to pay PMI is because the home has not had 20% of it's cost paid. How do you avoid PMI? Make sure that 20% of the cost of the home is paid. It does not need to be paid out of your pocket, it can be paid with a second mortgage.

What you are failing to recognize is that although you aren't paying PMI, you ARE paying a higher rate on the second. Six of one, half dozen of another. I used to think the same way until I realized that they are gonna make their money off of you one way or the other, whether it's taking less risk by making you buy PMI, or "self insuring" by making you pay a higher interest rate on your second.

 

[STR8UP]

Originally posted by Francisco d'Anconia
What type of mortgage is usually less that 5%? Interest only mortgages. Why do you want an interest only mortgage? The interest is deductible.

That's not the best reason for wanting interest only mortgages.

The main reason is to conserve cash for other investments. If your cash flow improves because you don't have to pay principle, that is extra money that can be REinvested into something that makes you a higher rate of return.

Equity in a property is to the benefit of THE BANK, not you. The bank gains extra security on their loan as you pay off the balance and as the propert that is collateral appreciates. The smart investor "harvests" the equity by taking out interest only loans (thus not giving excess aquity to the bank in the form of loan paydown) and by borrowing against appreciation throughout the years to fund more investments.

I have quite a few properties that I will likely be refinancing to take out the equity and roll into other ventures. Usually after you own a property for a year the bank will loan you against a new appraised value. The you simply take that money and use it to make MORE.

I love this game!

 

[al77]

Originally posted by Francisco d'Anconia
Understand that the only reason people have to pay PMI is because the home has not had 20% of it's cost paid. How do you avoid PMI? Make sure that 20% of the cost of the home is paid.

It does not need to be paid out of your pocket, it can be paid with a second mortgage.

What type of mortgage is usually less that 5%? Interest only mortgages.

I am aware of the relation between 20% and no PMI. Sure, but I can't pay 20%, fixups costs, closing costs, etc on a $150k home.
I simply don't have that kind of money.

You refer to a second mortageg as home equity loan, right? Well, I don't have a home. So I don't have that opportunity.

Yes, I inquired about interest only loans. They are a bit better in terms of payments. But it is not crucial. The crucial thing is to earn enough to get qualified for a loan.

It is all great when you already have money: in your home or as an income. But I don't have either. I just saved money for a about 20% downpayment and was looking for a partner to get a loan. But most people I know are so much in debt, they cannot even get qualified. Neither can I.

 

[unamean]

i am a mortgage broker and i can tell that you guys really dont know what the hell you are talking about. first off there are 2 types of banks. 1.conforming(citi bank, wells fargo, chase) 2. non-conforming(argent, delta, bnc). now the conforming banks are insured and regulated by fannie mae. they insure the loan up to 80% of the value. if you go above that you get pmi or private mortgage insurance. its true that you split the loan up after 80% to avoid pmi, but the intrest rate is much higher on the second because its a bigger risk. you could also get a equity line of credit for the second if you want, but i dont suggest it because you get the prime rate which is adjustable and at about 7-9% depending on how good your credit is. non-conforming banks have no pmi, will do 106% financing and are much more easer and faster to work with. there are also 3 types of income you can show. 1. full doc(show all your income, w2's, paystubs, tax returns) 2. stated income( just lie about your income and you dont have to prove it.) 3. no doc (just that). you get the best rate going full doc because its less of a risk to the bank.

now i can go on forever about loans and different types of loans but theres just to much to go over. my only advice would be to find a good mortgage broker who knows what the hell he's doing.


p.s. i am a good mortgage broker and if you would like to get pre-approved for a loan please call me 516-422-6449-mike

 

[Francisco d'Anconia]

Originally posted by al77
I am aware of the relation between 20% and no PMI. Sure, but I can't pay 20%, fixups costs, closing costs, etc on a $150k home.
I simply don't have that kind of money.

You refer to a second mortageg as home equity loan, right?

Wrong. Like I said earlier, you need to find a mortgage broker, preferable one who owns investment property. Stay away from bank loan officers, they are not nearly as knowledgeable nor equipped as mortgage brokers and they provide very limited information.

 

[Francisco d'Anconia]

Originally posted by STR8UP
That's not the best reason for wanting interest only mortgages.

You didn't read my entire post, did you?

 

[Francisco d'Anconia]

Originally posted by unamean
...
now i can go on forever about loans and different types of loans but theres just to much to go over. my only advice would be to find a good mortgage broker who knows what the hell he's doing.

This guy understands, but look! HE'S A MORTGAGE BROKER!!!!