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Financing in 60653 : Real Estate Advice

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  • Home Buying19
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Activity 3
Mon Apr 11, 2016
Lisc714 answered:
Is this NJ condo fanny may approved The Clusters at Washington
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Thu Feb 19, 2015
Rob Weber answered:
You'll get two different answers asking a Realtor and a loan officer. Obviously you've seen the one side, now consider the other...

If you're planning on living in the house, we have to consider the state's high cost lending law that basically says if the fees on your loan exceed 5% (applicable to owner-occupied REFI's but not purchases), you've just issued a high cost loan. Lenders+title companies+appraisers would have to cut their fees to be able to originate a sufficiently small loan and at a certain point, the fees can't be cut anymore and you have a situation where it's nearly impossible to close on a financed transaction. You'll run into one of two things, lenders who have a minimum loan amount (this is generally the deal killer) and then others who don't but then have the issue with the high cost rule.

It'd behoove you to carefully weigh the pros and cons before making a decision. There are many homeowners out there that own homes they can't rehab because they went the purchase-and-worry-about-it-later route.

A rehab loan (203k/HomeStyle/HomePath renovation) is a great option if you can get the seller to agree to a 45-day close. I've done them in less than 30 days but the stars need to align for this to happen usually (borrowers and contractors usually can't get their docs together in two business days) so I always recommend 45-day closes. If your option is to buy+roll your rehab into one loan up front or potentially lose the deal, you may want to consider potentially losing it if you're not in a financially strong position to rehab it with your own funds post close or not willing to use hard money. Speaking of hard money, there's always this route but not every homebuyer is comfortable with this though it's not hard to find a referral to a reputable hard money source if you want one.

If you're buying an investment property with cash and want to do a financed rehab post-close, make sure you you get pre-approved for the rehab loan ahead of time or you may find yourself in a predicament. Also consider that post-close, you'll have seasoning to contend with so you can't use the new appraised value in most cases until one year has passed so don't plan on pulling all your cash back out immediately after close.

That's a summary from my last presentation, there's more to it (there always is) but that should give you a good base from the lending side of things to help you make a sound decision.

Best of luck!
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Thu Sep 17, 2009
Carlos Lievano answered:
Hey Cmaguire1113,

There is a lot that goes in to this... nothing to complicated but Phillip responded it depends on several variables. I can't tell you if 3k is enough b/c we dont know the value of the project as a whole; among other factors.

I can tell you that I recently refinanced someone in the Logan Sq area where their building has 3-units and their reserves where significantly more than 3k... this isn't an apples to apples comparison... of course but we'd need more information to really give you a better answer.

Since your post was a while ago - can you tell us what happend here?

Best wishes,

Carlos Lievano
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