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I Love Bama
Alabama Fan
Alabama
Member since Nov 2007
31297 posts
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Any mortgage brokers in here?


Trying to help a family member get into an investment property. We found a great house next to a college campus to buy. It is worth about $180,000 and we are going to be able to pick it up for $120,000.

Why do the banks make you put a % down based on the buying price rather than what the house is worth? I was trying to help her buy it with no money down.

It wasn't like that when I got started. Anyway, just curious.







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MikeBRLA
LSU Fan
Baton Rouge
Member since Jun 2005
9051 posts

re: Any mortgage brokers in here?


quote:

Why do the banks make you put a % down based on the buying price rather than what the house is worth? I was trying to help her buy it with no money down.


Bc selling price is what the house is worth. That is the market value, period.






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ZereauxSum
LSU Fan
Lot 23E
Member since Nov 2008
7171 posts
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re: Any mortgage brokers in here?


quote:

Bc selling price is what the house is worth.


This.

Te appraised or market value doesn't mean anything once the house goes under contract or is sold.






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foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
28582 posts
 Online 

re: Any mortgage brokers in here?


quote:

Why do the banks make you put a % down based on the buying price rather than what the house is worth?


They don't do either. They want you to put a % down based on what the appraiser thinks it is worth.

What you think it is worth and what the seller thinks it is worth don't matter two bits.






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MikeBRLA
LSU Fan
Baton Rouge
Member since Jun 2005
9051 posts

re: Any mortgage brokers in here?


That simply isn't correct. Usually they take the lesser of the two. FYI. "What the appraiser thinks its worth" is actually what buyers and sellers think its worth since they basically only use sales comps on residential appraisals.

The ONLY thing that matters is what someone will buy the property for since that's where the money comes from. Think about it.






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I Love Bama
Alabama Fan
Alabama
Member since Nov 2007
31297 posts
 Online 

re: Any mortgage brokers in here?


quote:

Bc selling price is what the house is worth. That is the market value, period.


Not really answering my question but you're wrong.

A distressed sale is not indicative of market value.






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MikeBRLA
LSU Fan
Baton Rouge
Member since Jun 2005
9051 posts

re: Any mortgage brokers in here?


quote:

Not really answering my question but you're wrong.


So every appraiser and lending institution is wrong and you are right. Got it.

FYI. "Distressed" sales carry the same weight as others as sales comps on appraisals.






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I Love Bama
Alabama Fan
Alabama
Member since Nov 2007
31297 posts
 Online 

re: Any mortgage brokers in here?


Just stop. You're so wrong.

Back to my original question....






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hawkeye007
LSU Fan
greenwell springs
Member since Feb 2010
1794 posts

re: Any mortgage brokers in here?


you want the correct answer here it is. first there is no way possible to buy an investment property without putting 20% down on the house. Since the mortgage crash of 2008 they have changed the rules so you can no longer use equity in the house as the downpayment. Also when purchasing a house the contract price for the house is the value used to determine the LTV (loan to value) not the appraised value of the house. Dont ask me why i dont ask these questions they set the rules i lend by them.





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blacykaty
LSU Fan
Katy, Texas
Member since Nov 2009
300 posts

re: Any mortgage brokers in here?


A previous poster answered sort of, but not specifically your question.

The down payment is based on the LOWER of the appraised value OR the sales price. It has been this way the 20 years I have been in lending. However, several year ago, you could set up a loan based on the appraised value only - not any more.

Investment property is currently at 20% down minimum, with generally better interest rates at 25%. Most of my investors understand the programs and are simply trying to pay it off quickly and work off of long term cash flow.






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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
5871 posts
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re: Any mortgage brokers in here?


Hawkeye has correct answer. 20% of purchase price down is about 3.875, 25% is 3.75% as of Friday.

Whatever the contracted purchase price, your LTV is 80-85%.

This excludes rural






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hawkeye007
LSU Fan
greenwell springs
Member since Feb 2010
1794 posts

re: Any mortgage brokers in here?


ITNEVERRAINS: I just started TN loans about 3 months ago..i would like to strangle every appraiser in the state of TN..slow does not begin to describe the process with these people





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Swifty
LSU Fan
Member since May 2012
915 posts

re: Any mortgage brokers in here?


quote:

hawkeye007


Don't want to derail the thread, but how do you like the job? Is there any sales involved? Is there any incentive based compensation?






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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
5871 posts
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re: Any mortgage brokers in here?




Tell me about it. But our market is up 30% from 2011. Nashville and 15 minutes south via 65 (Franklin, Brentwood) is an absolute sellers market here, which is crazy. Appraisers are spread thin here.

I have 5 closings in October, 2 buyers full price, one 2k off 237k ask, two sellers, one got full ask, other 5k off ask but knew we were over market value. No sellers paying any CC.

Last 90 days our little 3 man team within brokerage has done almost 2 million in 12th south where we had seller and buyer and negotiated deal before it went on MLS.

Welcome to no state income tax and right to work state. In Williamson county alone adding 150k jobs over next 5 years. Our relo dept. does not sleep with all companies inquiring here



This post was edited on 10/9 at 6:56 am


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hawkeye007
LSU Fan
greenwell springs
Member since Feb 2010
1794 posts

re: Any mortgage brokers in here?


there is a ton of sales involved. After 8 years as an originator i enjoy my job. I am compensated very well but the stress that comes with this job will crush you if you dont know how to deal with it.





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prplhze2000
LSU Fan
Parts Unknown
Member since Jan 2007
30716 posts

re: Any mortgage brokers in here?


Hawkeye is right. Forget buying investment with no money down. Not happening.





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Fat Bastard
New Orleans Saints Fan
Paradise
Member since Mar 2009
15622 posts

re: Any mortgage brokers in here?


what plenty refer to as "no money down" does not literally always mean no ACTUAL money down. just no cash directly out of YOUR pocket right now.

Investors find ways to get OPM for down payments.

of course this was easier to do 10 years ago for obvious reasons.






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Shankopotomus
New Orleans Pelicans Fan
Brian Roberts Fan
Member since Feb 2009
18175 posts

re: Any mortgage brokers in here?


good for you

why are the appraisers spread so thin?






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