Financing > Conventional Financing For Wholesale Deals

Conventional Financing For Wholesale Deals

by: Lou Castillo

This info is very important for both new and experienced wholesalers, AND buyers of fixer-uppers, to carefully read and understand. We learned it painfully, hopefully you won't have to :-)

Often times we are asked by investors about using conventional financing for their investor deals. In other words, they want to go through a bank or other similar lending institution to purchase a fixer-upper from us, or another wholesaler. The obvious advantage is that rates are cheaper, and the loan origination fees (many times referred to as ?points?) are both much less than ?hard money? (loans from individuals or small institutions specifically for investor type properties, with rates ranging from 5 points and 15% interest to 10 points and 18% interest). There are, however, some obstacles to using conventional financing of which you must be aware.

First of all, these banking institutions will only loan on inhabitable, decent condition property. So if the property you are considering needs major repairs, forget this type of financing for the most part. Next is how you have structured the deal. Because of all of the recent frauds cases where banks have been burned, we have been unable to locate any conventional lenders willing to loan on a deal that has been ?assigned? from the Buyer listed on the Purchase and Sales Agreement to a third party. They require that the Borrower be the Buyer named in the Agreement. And they absolutely will not fund the Assignment Fee.

You can get around this if you can live with either of these solutions:

1. The wholesaler re-writes the Agreement with the Seller listing the new Borrower as the Buyer. This solves the paperwork issue. The Buyer will still have to fund the Assignment fee with some other source of funds. The wholesaler in this scenario is not protected because none of the paperwork demonstrates his right to purchase the property, nor the assignment fee to be paid. A separate agreement would have to be established with all of the parties. You see how this can get very complicated and cumbersome. By the way, even if you have a cooperative Seller you can not just list the inflated price (original sales price plus Assignment Fee) on the Agreement with a stipulation that the Assignment Fee portion will be paid to the ?Wholesaler? at closing, because then the wholesaler?s fee will show up on the Seller?s side of the Settlement Statement appearing as if he acted as a Real Estate Agent. Note: This may be OK if the ?Wholesaler? is in fact an agent. They?d need to check with their Broker.

2. The wholesaler must become the owner of the property and in the chain of title. Then he can legitimately write an Agreement with the Buyer listing the full price of the property including the assignment fee. The wholesaler can accomplish this with a cooperative Seller using short term Seller financing, ?subject to? financing, or a short term bridge loan from a home equity line or private lender (usually friend or family). As long as the loan-to-value (LTV) still fits their requirements, the banks will loan on the new purchase price ? thus funding the assignment fee.

The other item to keep in mind when considering conventional financing is that it is relatively slow. Many mortgage brokers will tell you that their loans will be ready to close within 10 days to 2 weeks from submission. The reality is that they can only guarantee that they will process the loan and get it to a lender within a short period of time. With the current rush for refinances, most lenders? underwriting departments are backlogged ? and applications can get stuck there for a week or more. They will also issue conditions that must be met, then submitted back to underwriting for final approval. Then add another couple of days for the loan package to be prepared and sent to the attorney.

To be safe, you should count on three weeks to a month for a loan to close. If it closes sooner, you?ll be pleasantly surprised. If the deal doesn?t allow for that much time, you may want to consider alternative funding sources so you don?t lose it all because time has run out and the loan isn?t ready.

Conventional financing does have a place in wholesale deals. We?ve closed several ourselves ? but it doesn?t work in all cases. You need to understand the process, and what will fly, and what will just kill the deal.

Best of success & abundance,

Lou Castillo

About The Author

Lou Castillo

FREE! Real Estate Investing Secrets To Earning $100,000 Your 1st Year! -- 11 Overlooked Real Estate Statregies That Will Turn Your Investing Business upside Down And On The Fast Track TO Success...Guranteed! Plus A Bonus Track With A Secret So Successful It Can Double Your Investing Income Overnight!

http://www.InvestorSuccessTactics.com

josh@joeandlou.com

Poor Credit Home Loan ? Get The Mortgage Loan You Want

by: Carrie Reeder

Having poor credit alone cannot hold you back from getting the home loan you want. Buying a home that is everything you want in a home, is a very exciting experience. The blemishes on your credit history will not alone keep you from getting the home you want and the home you deserve.

Here are some things to keep in mind when moving forward in the application process to get your home loan:

Contact or apply to many different lenders or brokers ? Online you can fill out many mortgage applications where the lender or mortgage service company does not pull your credit history. If they don't ask for your social security number, they usually cannot pull your credit. Brokers usually use the initial application or inquiry form and what you tell them about your credit to make a decision about whether they should pursue the application and pull your credit or not. Many lenders...

Poor Credit Home Loan ? Get The Mortgage Loan You Want

Financing > Poor Credit Home Loan ? Get The Mortgage Loan You Want

Buying A Home After Bankruptcy - Get A Mortgage Loan After Bankruptcy

Buying A Home After Bankruptcy - Get A Mortgage Loan After Bankruptcy

by: Carrie Reeder

If you have a recent bankruptcy on your credit and are looking to get financing for a home, there is hope. Buying a home with bad credit will just put more emphasis on the other two factors needed to get a mortgage loan, which are; income verification and a down payment.

After bankruptcy most lenders want you to wait at least 2 years from the time of the bankruptcy discharge before they will consider you for a mortgage loan. After the two year waiting period is over, you should be able to get financing easily. You should also be able to get 100% financing as well. You can usually achieve this as long as at least most of your payments have been reported to the credit bureau as having been paid on time since the discharge of your bankruptcy.

If you are looking to get a mortgage loan after bankruptcy sooner than the 2 years from the time of discharge,...

Buying A Home After Bankruptcy - Get A Mortgage Loan After Bankruptcy

Financing > Buying A Home After Bankruptcy - Get A Mortgage Loan After Bankruptcy

Tips On Dealing With Auto Fraud

Tips On Dealing With Auto Fraud

by: Rishi Chawla

The auto industry and their dealers are rife with scams and fraud and the potential buyer needs to be armed with the knowledge of how these scams work and how to avoid them. There are many dealers that run reputable businesses and can get buyers into a vehicle without using fraudulent means, but there are always those individuals or companies that are looking for ways to take consumers for a ride. The state of California, San Diego and Los Angeles in southern California in particular, is home to many of these scam artists. Even smaller states like Oklahoma have their share of fraud cases and attorneys there are as busy as lawyers in the larger California market. If you are fortunate, you won't be a victim of one of these disreputable dealers, but it is wise to be aware of potential scams before you head to the dealer. Here are some tips on dealing with auto fraud.

People with bad credit are often...

Tips On Dealing With Auto Fraud

Financing > Tips On Dealing With Auto Fraud

Taking the Time to Find the Best UK Loans

Taking the Time to Find the Best UK Loans

by: John Mussi

When looking for UK loans, it's always important to take your time so that you can compare loan rates and terms from a variety of lenders.

Depending upon the type of UK loans that you're looking at, different lenders may offer different rates depending upon your credit history, your income, and even the type of collateral that you're using to secure the loan if you're applying for a secured loan.

We will look at each of these factors a little more closely below, as well as options to help you find the best UK loans to fit your borrowing needs.

Credit history

Your credit history is a major consideration that banks and lenders will look at when you apply for UK loans. Basically, your credit history is a record of your past dealings with banks, credit lenders, and other businesses that offer you some sort of credit or financing.

The higher your credit score is,...

Taking the Time to Find the Best UK Loans

Financing > Taking the Time to Find the Best UK Loans

The Primary Cause Of Business Financing Frustration

The Primary Cause Of Business Financing Frustration

by: Brent Finlay

Finding proper business financing is not easy at the best of times for most small and medium sized business owners and managers.

There are a number of reasons that collectively explain why the business financing market can be so difficult to understand and navigate.

But probably the single biggest reason is the lack of useful information about how the business financing market actually works.

Business financing information and education sources predominantly come in two forms: 1) Text books; 2) Major bank advertising.

If you've ever read through a educational finance text book or taken a business financing course, you already know how difficult it can be to apply the theories, principles, and strategies to a small or medium sized business.

Our formal education system provides limited information as to how the market place works, how to plan...

The Primary Cause Of Business Financing Frustration

Financing > The Primary Cause Of Business Financing Frustration

Conventional Financing For Wholesale Deals

Conventional Financing For Wholesale Deals

by: Lou Castillo

This info is very important for both new and experienced wholesalers, AND buyers of fixer-uppers, to carefully read and understand. We learned it painfully, hopefully you won't have to :-)

First of all, these banking institutions...

Conventional Financing For Wholesale Deals

Financing > Conventional Financing For Wholesale Deals

Subprime Mortgages And A Past Bankruptcy

Subprime Mortgages And A Past Bankruptcy

by: Carrie Reeder

Even with a Chapter 7 bankruptcy in your credit report you can still qualify for a sub-prime mortgage. Once approved, you can then use your mortgage to improve your credit history, qualifying you for lower interest rates in the future.

The Effects of a Bankruptcy

A bankruptcy will affect your credit score based on how long ago it was. So a bankruptcy discharged less than a year ago will qualify you for a D loan. These types of loans usually require 30% down and a high interest rate.

By waiting a year after a bankruptcy, you can qualify for a B or C loan with their lower rates and down payment requirements. If you wait two years, you can qualify for a FHA home loan. In four years, you can qualify for a conventional loan.

Besides your bankruptcy record, financing companies will want to see a steady payment history. This includes your credit and rent payments. Cash reserves...

Subprime Mortgages And A Past Bankruptcy

Financing > Subprime Mortgages And A Past Bankruptcy

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