| Home loan PRE APPROVAL questions |
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Screwdriver
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Location: Northern California
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| Home loan PRE APPROVAL questions |
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I have a friend who is very successful in the real estate business and they have offered to help me search for properties.
They said first I need to get pre approved for a new loan.
I currently own 1 home that I live in with a conventional mortgage. I put 20% down so I dont need loan insurance. I have had the loan for about 3.5 years.
My credit score is decent, around 780.
My wife and I have some cash saved up, about 20k.
Questions:
I was told that having this cash available in a checking account or savings account can help with getting approved for a bigger load/better rate.
Is this true?
If so, is it better to have cash in checking or savings?
How LONG does money need to be in these accounts? 1 day? A billing cycle? Months?
I have one main credit card that I use but pay off every month. Is this good? Does it help to have at least a small balance?
Can anyone suggest one lender over another for a specific reason? My last mortgage was done by vitek and which was then sold to citimortgage. I dont much to compare it to so I dont know how to rate it.
Basically Im looking to maximize my potential to get pre-approved to buy a bank owned/auctioned duplex for ~100k for extra income to get started in the real estate business.
Thanks for any feedback.
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Mon Sep 19, 2011 5:21 pm |
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oldguy
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Location: arizona
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quote:
Is this true?
If so, is it better to have cash in checking or savings?
'Liquid funds' is what the lender wants to know - it can b stocks, bonds, cash, checking account, savings account - just so you can get access to it and be able to bring it to the closing table. It doesn't help to owe money on a cc, the lender needs to know your income, your net worth, your l;iquid assets, and your credit score.
As for the 'best' lender - they all follow about the same rules - not much difference.
The premium on interest rates for non-owner occupied real estate is 1/4% to 1/2%. And the required DP is 25% to 30%.
quote:
a bank owned/auctioned duplex for ~100k for extra income to get started in the real estate business.
You probably know this - but a B/O unit gets you into two distinct & different businesses, different skills - rennovation and landlording. The reno involves spending $25k to $35k for all interior flooring, new appliances, paint in & out, new AC, furnace, water heater, roof. And repair of damage - we have had to replace garage door openers, sinks, door knobs, etc. Of course the reno time takes away a couple month of your landlording income - maybe $3000 for the duplex?
Consider that a turn-key ready to go duplex might cost $130k, gives you a single $100k loan, and it rents right now. Meanwhile, a $100k duplex leaves you with a $75k loan, and $30k of stuff on your credit card - and you are 2 months late on rental income. In other words, the B/O units are always cheaper, they just appear cheaper.
(Disclosure - my rentals were 2 to 8 yrs old, the first owner had hung the drapes and planted the grass - so I had near-new appliances, plumbing, electrical service, water heater, roof, floors - almost no costs for 5 to 10 yrs. And, in a couple cases, I had tenants ready to go in when I closed and got the key.)
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Mon Sep 19, 2011 8:18 pm |
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Screwdriver
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Fantastic info, thank you so much!
I do have "Liquid funds" in different areas and was wondering if there was a difference if it was hard cash in the bank, and you suggest no, good to know.
As far as what type of property and how much work it will take.. that is another question and one that I have not yet determined.
I was told that the best time to buy is typically Nov-Jan and I want to get pre approved and jump if/when the time is right.
Thanks again.
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Mon Sep 19, 2011 9:44 pm |
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oldguy
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quote:
best time to buy is typically Nov-Jan
In general, markets cannot be timed (that is why they are called 'market').
And, if you are a longterm invester, purchase price fluctuations are not important. I have one house that cost about $50k 35 yrs ago, now it is $300k (it wa about $600k in 2006, LOL). At any rate, it is $300k now - and whether I paid $45k or $55k isn't an important part of my profits. Note that +/- $5k is +/-10%. Some day, after your tenants have paid off your unit for you, and you sell it for $600,000, it won't matter much whether you paid $90k, $100k, or $110k. 
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Mon Sep 19, 2011 10:23 pm |
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Offshore-Wealth.com
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| Re: Home loan PRE APPROVAL questions |
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quote:
Originally posted by Screwdriver
I have a friend who is very successful in the real estate business and they have offered to help me search for properties.
They said first I need to get pre approved for a new loan.
I currently own 1 home that I live in with a conventional mortgage. I put 20% down so I dont need loan insurance. I have had the loan for about 3.5 years.
My credit score is decent, around 780.
My wife and I have some cash saved up, about 20k.
Questions:
I was told that having this cash available in a checking account or savings account can help with getting approved for a bigger load/better rate.
Is this true?
If so, is it better to have cash in checking or savings?
How LONG does money need to be in these accounts? 1 day? A billing cycle? Months?
To your original question, most banks look for three months of statements to verifiy cash liquid requirement.
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Tue Sep 20, 2011 1:45 am |
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Eveleen
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| Re: Home loan PRE APPROVAL questions |
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Hey, the new loan limits affect everyone. I think new FHA mortgage limits can be right for you to consider an FHA refinance loan or an FHA mortgage for your new home purchase.
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Mon Feb 13, 2012 8:57 am |
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cohan99
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| Re: Home loan PRE APPROVAL questions |
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quote:
Originally posted by Screwdriver
t.
Basically Im looking to maximize my potential to get pre-approved to buy a bank owned/auctioned duplex for ~100k for extra income to get started in the real estate business.
Thanks for any feedback.
One of the 1st things you should investigate when you become interested in an REO property is the present market value. This is something a skilled local buyer's agent can do to help you.
A Realtor that knows the local inventory and recent sales data should be hired to help you with the transaction. While a banks goal is to get rid of their inventory as fast as they can, don't expect the bank to consider silly low ball offers especially when the home is 1st listed for sale.
In my experience while working as a Massachusetts Realtor for the past 23 years, I have never seen a bank accept anything less than 10% under the asking price. In many cases the price has already been set aggressively to begin with. Like every other seller the banks goal is to maximize the price they receive for a property.
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Fri Feb 17, 2012 7:18 pm |
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Flipyourdebt.com
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I agree with the FHA loan option. You can reduce your down payment to as little as 3% if you qualify for it.
Maybe take a look at that.
www.flipyourdebt.com
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Wed Feb 22, 2012 12:15 pm |
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SweatyGirl
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quote:
Originally posted by Flipyourdebt.com
I agree with the FHA loan option. You can reduce your down payment to as little as 3% if you qualify for it.
Maybe take a look at that.
Sure, at least 3% would be if you qualifty for this type of loan
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Thu Apr 12, 2012 8:21 pm |
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