Profile picture for noteksarah

is it possible to get an equity loan on a paid off property if you are not currently employed

but have good credit, tangible assets equal to 4x the amount of loan reqested
  • December 19 2008 - San Rafael
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Answers (10)

Best Answer

Andrew, as I stated I was using a CD for illustration purposes.  It was to illustrate that the money may be temporarily unavailable.

To answer your question- Yes I personally would jump all over the opportunity to lend $200k at 24% ltv.

I am however a little confused why a $200,000 loan is necessary to buy a HUD home that will cost less than $100,000?

To the O.P.  Apply for your loan where you bank, with a credit union, or where you have your 401k.  Many retirement companies lend based on assets, and not income.  It is called a non-recourse loan and is based solely on assets. 

  • December 20 2008
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Profile picture for noteksarah
 so if I moved my 401 to Wells Fargo acct I might get pref rate??  I have longtime accts with WF so  I will start the new year out checking with them, thanks this has given me impetus to check many directions!
  • December 27 2008
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I can't definitively tell you what rate they will charge you- if I had to guess I would say 7% range.


The retirement company would be whoever you have your 401k with (ING, Merrill Lynch, Edward Jones, etc).  This is not a reverse mortgage at all.  Many large retirment/investment firms make these loans to their clients that have a large amount of assets with them.

For example: Wells Fargo offers conventional finance rates on their jumbo loans to account holders who have at least 100k on deposit with Wells Fargo.  This is not part of the economic stimulus plan, it is something that they do as a perk to their clients.  Not many people know this however.

I agree with you that now is a great time to exploit the market and take advantage of some good investment opportunities.  I think it makes perfect sense to do it.

 


  • December 21 2008
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Profile picture for noteksarah
What kind of interest rate should I expect on a non-recourse loan and what is a retirement company, are you refering to a reverse mortgage? That will not work as it is not possible to rent or lease the property with that type loan. As to the 200k loan vs 100k need. This would give me wiggle room to pay the note for a couple of years if needed&possibly buy another property on the cheap giving me 2 more homes that are free and clear. The present market condtions while distressing seem like an opportunity to make up for not selling the home while the market was hot and put these other assets to work.  I could just liquidate everything and be ok but it seems  foolish not to exploit what appears to be a great opportunity, low interest and ability to actually buy undervalued property vs a possible tax burden.if I sell my assets outright.  Does this make sense in this context and would I appear to be a good risk.
  • December 20 2008
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troy,
That loan is secured by the cd not the house!

Note,

Would you lend you money in that situation?
  • December 20 2008
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Profile picture for noteksarah
Ok what I have is paid off real estate value 750k in this new market and collections appraised at 400k auction value.  What I am looking to do is purchase with cash a hud home at less than 100k.  I would like to give the market time to recover which I think is about 3 years out before I sell the 750k house and rent it out for the interium appro 3-4k a month which would more than cover the 200k loan I would be asking for.  At this point I would have no debt except the loan. If needed I could liquidate some of the collections for which I have firm offers.  I also have my 401 valued at 100k that I can draw on in two years. And my credit score is around 730.   What I am wondering is if any lender would accept me for a loan if I am not employed but have these kind of assets(which I have valued modestly.  I just dont want to go to bank and be laughed out the door!
  • December 20 2008
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Andrew,

That is an easy answer (hypothically).  Perhaps the borrower has money tied up in a CD.  To avoid penalties of early withdrawl it may very well be less expensive to take out an equity loan and pay it back (less interest only payment) when the CD matures.

I use a CD simply for illustration as their rate of return is generally very low (currently 3.75% apy), however the penalties for an early withdrawl tend to be much steeper.
  • December 19 2008
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Troy,

I would have to disagree with you!  No documented income....no Equity loans.  If you have 4X what you are looking for why do you need the loan in the 1st place?
  • December 19 2008
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Contrary to what the person before me wrote, I can see how you would pay back the loan considering your assets.

To answer your question;  your best bet would be to apply for the equity loan at the bank where your assets are on deposit.  Depending on your credit score, amount of the credit line needed, and value of your home, you should not find too much difficulty in securing the loan.

Because of the fact that you are now presently unemployed it is imperative that you do have the assets and credit score to warrant the extension of credit. 

Best of luck to you and apply for your loan wisely. (i.e. where you presently bank, credit union, etc.)

  • December 19 2008
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Have you asked yourself how you plan to sustain that mortgage?

  • December 19 2008
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