January 10th, 2010
I want to buy a $400,000 house from someone but want to have the money ready before I approach them?
I have been approved for $40,000 line of credit and I have another $40,000 in the bank plus 2 other properties and a credit score of 680. I want to do a 5% down mortage and cover the closing costs, and leave the rest of my funds for rehabbing the house and about 6 months of mortgage payments.
My question is I want to have the the $380,000 ($400,000 purchase price subtracted by $20,000 down payment) READY BEFORE I PURCHASE THE PROPERTY for a quick closing.
Once again, my question was how can I have the money ready to purchase a house from the seller before the bank even gets to see the house? My goal is a quick closing…Thanks
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Filed under: Buy Property
Why does the bank need to see the house?
Get a pre-approval for the $380,000.00. Surely you knew you could do this. Your FICO should be higher for an ideal rate.
What collateral would you use for the 380, if not the property you are purchasing?
Use a great mortgage broker.
Most sellers attorneys will need to have time to order title, anyway. Maybe even local inspections and compliance. Once your offer is accepted, either or both sides make have to request extensions for these issues.
If your credit score were higher you would find lenders more agreeable. Above 700.
$40,000 credit would need to be reserved for after purchase, use before purchase would throw the debt ratios off and cause the interest rate to be higher on the purchase. Use it for the rehab if you must.
Get approved subject to appraisal, and closing conditions.
This process with only 5% down and your under 700 score, could possibly take 2 weeks.
Try 3% down, same time.
Check with Mort officer for a closing date for two weeks after offer is accepted. You purchase when he says, you can meet this criteria, with underwriting.
If you want a faster timing. Check out the equity in your other properties and make the purchase with 20-25% down, no-doc, you will pay more with the low credit score, but it wont be substantial amt for short term invest. You will still have to allow 2 weeks after acceptance, for appraisal and distribution of funds.
Look into possible FHA 203K, not sure if I have the term correct. For rehab with little down options.
Sounds to me like your trying to get away with something ie the place is worth 1.2 mil.
Ethics aside, I’m not entirely sure I wouldn’t do it myself if I had the chance. I don’t think it can be done with bank financing, as in the guys that can pull it off are the ones holding (in your case $360,000), enough to buy it fix it and flip it.
I think you need to pursue it through conventional means and if you pull it off think how easy the next deal will be.
Good Luck
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The free evaluation form at wwwtotaldebtsolutionsllccom and we will have one contact you within 24 hours.