Fri, Jul 03, 2009
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No Doc Or Great Credit But Own House,forget HELOC? |
dreamscape1
8 Posts
Member Since: 03/21/2005
Walkertown, NC
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Posted: 11:06 on 03-22-2005
My wife and I bought a forclosure that we own free and clear, we paid cash with no loan. We want to fix it up, rent it out, use the equity to buy again and repeat the process. We arent able to show documentation of income (self employed carpenter and painter) or have brilliant credit , my average is 572, unsure of hers. We are able to do the work ourselves and can create at least 50% equity in each property we rehab,so are there lenders that dont care what we look like on paper as long as our real estate holdings are twice as much as our loan amounts? Ive talked to a couple of hard money lenders that dont do small loans so I came to realize what we needed was a HELOC but I guess we dont fit the standard mold of borrower. We have a free and clear asset and I understand most borrowers dont, so are there lending solutions now or do we need to spend a couple of years making ourselves look good credit and income wise before we try to pursue our investment career? Advice from credit and mortgage specialists would be very helpful for us right now, thanks.
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ebaybobby2
31 Posts
Member Since: 09/16/2003
Worcester, MA
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Posted: 11:52 on 03-22-2005
Why not repair/create credit while repairing the property?
Buy the materials for the rehab at a store(s) that offer credit like a Lowes or Home Depot, make sure you pay at least the minimum balance on time, every month, for six months. Then maybe get another card from Sears and purchase appliances or tools or something you need to improve this property.
Make sure you meet your current obligations as well, if you already have accounts with suppliers than make sure they are always current.
Once lenders see a history of improvement and good payment for a couple of reporting periods they will warm up to extending you a loan. It is best to maintain a solid payment history and zero or low balances, combine that with a property that has equity and positive cash flow and the banks will almost beg you to take their money.
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dreamscape1
8 Posts
Member Since: 03/21/2005
Walkertown, NC
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Posted: 16:12 on 03-23-2005
Thank you ebaybobby for your advice. Although it seems that getting credit from a place like Lowes or Home Depot would solve a good part of our rehab problem, the same lack of good documentation that would normally allow us to finance our deals also keeps us from looking good enough to get materials on credit from places like that. But it would help immeasurably just to have materials since we can do all the work ourselves. However, we are quite willing to use our property in any way possible to leverage our investment goals, there HAS to be some way to use it to move ahead. We are able to find good properties at good costs and since we can fix them ourselves we can accumulate at least 50% equity on a rental so it would seem like a very secure and profitable investment. If we have free and clear collateral wouldnt that compensate for a lot? Im sure some of you out there started with less than a free and clear $50-$60K house to use in any manner possible. Any credit solutions? Thank you.
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StuckKanuck
26 Posts
Member Since: 03/12/2005
London, KY
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Posted: 00:42 on 03-25-2005
OH Geesh!!!!
Kepp looking...... I onlly could wish to be in your situation.
I am finding the deals and cant seem to put it together because of lack of money or my FICO being too low at 630.
I would say keep looking as someone is going to asist you in getting a loan. The first one may have to put up the new property as well as one of the others for collateratal BUT since you make your payments and only doing to profit anyways you can sit and wait a few months to refinance and not be rushed for a quick flip.
I wish I had your troubles. LOL
Good Luck
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cjmazur
4284 Posts
Member Since: 07/23/2003
Cupertino, CA
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Posted: 01:46 on 03-25-2005
is the credit an easy thing to fix?
Find and talk to a loan broker, seems like you should be able to get a no doc HELOC.
Maybe shop for another hard money lender that might give you the " HELOC" on your home.
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dreamscape1
8 Posts
Member Since: 03/21/2005
Walkertown, NC
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Posted: 20:28 on 03-26-2005
Thanks y'all. I guess we'll just trudge along with our hand out and tails between our legs while the violin music has us all misty eyed and maybe we can find a private investor. Until later....
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popdragon
15 Posts
Member Since: 02/23/2005
Allerton, NY
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Posted: 14:52 on 03-27-2005
Here's some ideas,
Use the equity in your home to take out short term loans 5k, 10k,15k for home improvement or other purposes. Borrow 10,000 and use the money you borrowed to repay the loan itself. 10,000 at a 9% interest rate(high estimate), pay 900 a month, it will take about a year to pay back and the total cost of the loan will be $10,500. Make sure lender does not charge prepayment penalties on their short term loans.
Also secure credit cards and unsecured cards from CC companies such as Household, Povidian and Capital One are excellent tools for establishing credit, but one must be disciplined and not go beyond one's means. Fees and interest may be exhorbidant, but the goal is to establish credit within six to 18 months.
As a rule of thumb have about five to six items of credit, including phone, utility, gas bills, car payments, any credit cards, loans, and make sure to never miss any payments.
I hope I was helpful.
Happy thanksgiving.
_________________
Popdragon
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roboxking
217 Posts
Member Since: 06/01/2003
Miami, FL
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Posted: 17:25 on 03-27-2005
Most brokers have contracts with credit agencies that can easily fix your credit. The problem is that...the broker is not allowed to charge you....so often times they don't even mention it as this can get expensive. Anywhere from $100 ro $1000. Additionally the credit agencies can not offer that service to the consumers. Sounds like a violation of Anti-trust laws...but hey...
Offer the broker an incentive...and things will get done.
[ Edited by roboxking on Date 03/27/2005 ]
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RonInAZ
279 Posts
Member Since: 12/24/2004
Scottsdale, AZ
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Posted: 19:04 on 03-27-2005
So you're making enough to have a foreclosure for cash then you should be making enought to pay your bills. With a 572 you represent a significant credit risk. If a HELOC is not available do a cash out refi of that property and the lender will probably require you to pay off any bills. You don't want to close these just pay them. You'll have less than 50% opf your overall lines used and in a very short period of time credit will become available.
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dreamscape1
8 Posts
Member Since: 03/21/2005
Walkertown, NC
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Posted: 20:57 on 03-28-2005
Thanks y'all. Ive heard on here about cash out refinance but I'm not sure what that is completely, I had the impression that it was where an owner simply went and gave a first mortgage to someone as collateral for a loan but had good credit to start with. Is it possible to borrow on our house (assuming its worth several times what we want to borrow) and use the funds to start cleaning up our credit as well as rehab the house? We had some money that we couldve used to make us look good credit wise but we would'nt have been able to take advantage of the great deal we got so we just decided to get it because we KNEW we would regret it if we didnt. Now we have it and now we are worrying about getting the rest taken care of. Thanks again, the advice is very helpful for us.
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