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How to get mortgages for cheaper properties?

Looking for Mortgage loans of 50K size, 80% LTV. Which bank does it? Most banks have minimum loan requirements.

I am having a hard time finding smaller banks.
  • August 01 2013 - Chicago
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Answers (12)

Profile picture for user6940917
Update:

Thanks for all your suggestiona nd guiding me.
It is a hard job to finance cheap homes through lenders, so I do not expect my agent to know this.

Best deal I got is a local credit union willing to do a cashout refi for a shorter term period, as I pointed out earlier.

3.5% for 10yrs with 250 processing fee + Appraisal.
Seems to be the chepeast and most economical way to go.

I have also heard back from AmeriMortgage guys willing to finance a Homepath Renovation approved property for around 50K.But I am leaning towards cash purchase as I do not have to bid crazy high amount and look at refinancing options.

I am looking to get two places. One for myself and the other as Investment.

Found two deals, one near my place - peferct for moving in and another investment prop at a distance. Both would be perfect cash flow places.

First one I am going in at 50-55K bid.
Second one at just under 30K, investment property.

I got 52-54K cash.
Will be great if I can get both financed.
  • August 07 2013
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Your Realtor probably has a relationship with one that will do it.
  • August 01 2013
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Glad we could all help point you in the right direction, best of luck.
  • August 01 2013
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Profile picture for user6940917
I got this info from a rep, not a mortgage specialist.
So I am not clear on this.

The credit union does not orginate mortgages. They do only re-financing, home equity and helocs. They have a tie up another credit union which does mortgages.

I talked to TCF bank on this issue. They told me 12 months is min holding period. Also purchase price would be used - I am ok with this as I am not buying fixer uppers or doing rehab. 80% LTV of purchase price is enough for me.

I am planing to call a few more.
  • August 01 2013
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The offer from the credit union sounds like a good deal. Call them back and ask there if there is a "seasoning" requirement for the cash-out loan. This means do they require a waiting period from the time you purchase the home until they will give you the loan. Also ask them if the Loan to Value of the new loan will be based onthe sales price or will they base it off a new appraised value.
  • August 01 2013
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Profile picture for user6940917

Thanks, Dylan and others.

I understand the whole system is geared towards high closing costs at origination and low interest rates.

I am skeptical in using Mortgage brokers and then making an offer.
What if the loan is not possible after the offer is accepted.

Can you guys recommend local banks/credit unions in Chicago region which might do some loans right at the purchase.

I called up a few yesterday. Central Credit Union said they can give me a cash-out refi 3.5% for 10yrs at dirt cheap closing cost for loans 15K+. I can use a 401K loan and then do cash out refi. But I am still not clear if I can do refi immediately.

By the way I am first time buyer with clean credit, stable income.
Planning to buy 2 units, both cash flow positive. One to live and the other as rental.

  • August 01 2013
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Profile picture for Matt Laricy
Check with a local bank. They may be able to help on this.
  • August 01 2013
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Local banks are great sources.  You may not get the lowest rate in the market but they often will do those transactions.  Also, a Home Equity Line of Credit, which is usually a second mortgage, can be used to purchase a home and is far less costly than a mortgage.  You also likely have a smaller interest rate exposure.

The reason most lenders have minimums, by the way, is a gift from your government regulators.  Most states define "high cost loans" differently but in a nutshell they all use a formula that says, take all the fees, divide them by the amount of the loan and if the total is above 5% (usually) the loan is high cost.  Read: predatory and non compliant.

No lender today can afford to make that sort of loan due to the legal risk. So if you have $1000 in closing costs as a lender, that is 2%, add $2000 in title insurance and closing fees and you are at 6% of $50,000 and dead in the water.  On a $100,000 loan those same fees are only 3%.  

That is the logic behind minimums.  Hope this helps.


  • August 01 2013
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[Spam removed by Zillow moderator due to violation of Good Neighbor Policy.]

Tell her I sent you.
  • August 01 2013
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I can help you get Mortgage.

Julie

mortgage loan officer  (chicago- lake forest location)

[Spam removed by Zillow moderator due to violation of Good Neighbor Policy.]
  • August 01 2013
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Barry is right, I would try a local credit union. They might be able to lend a line of credit that will do about the same thing. 
  • August 01 2013
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 A local bank may be a good place to look.
  • August 01 2013
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