Out of state Lending steps?

Question

So I was presented with a property in Lawton. A sfr for $65,000. I am going to need to get some kind of loan. I’ll probably have to go through a hard money lender but idk what I need to do before talking to a lender about a property. Do I find a lender then talk to the seller or real estate agent about putting under contract or?

Any tips would be greatly appreciated.

Austin McClain · Answer

I have some lenders I know that you can reach out to if needed. Feel free to DM me.

Jason Wray · Answer

Rob,

Majority of Banks, Lender and Brokers will not be able to do a $65K loan due to the "high cost rule".  Loans under $75K do not have enough a high enough dollar amount for a bank to collect its mortgage margin.  If you have a Credit Union they might offer a loan for that size but yes you can get a HML - hard money loan.

Its pretty simple they are going to want to pull your credit to see your credit scores.  Typically as long as you have a 620 or better they will help but be prepared to pay 3 or more points and a higher rate above 12%.  Try to avoid a pre-payment penalty because you will want to refinance that loan within 6-12 months more than likely after you do some renovations/repairs and refinance on the new ARV.

Just make sure the amount at that time you are refinancing is $75K or more usually with some cash out to recoup renovation costs and pull out some equity from the ARV/appreciation. They will aks you for employment information and collect recent paystub, last (2) years W2 or (2) years 1099's whichever you have and if you own a business they will want to see most recent or last (2) years 1040's and 1120's business returns if you have or file them.

If you own a primary home you can do a cash out refinance and borrow the cash from the equity of your home or take out a HELOC.  Again if that is the case the same principals as above will apply but you will get a better rate and have no prepays with No points if you use bank and not a broker/lender.