small mortgages?

[Collin Smith]

I am looking at a property that is listed at $99,000.  I hope to get it lower than that but I am running into an issue with banks financing a small mortgage like that.  The banks I have worked with in the past won't go below $75,000 on the principle in a conventional mortgage.  I can go with a commercial loan, but it is a 5 year balloon and I would rather not go that route with this one.  What banks deal with small mortgages?  I am in Florence, SC.

[Randy E.]

@Collin Smith, banks make some (most?) of their profit on interest.  The lower the principal of the loan, the lower the net profits to the bank as a result of interest.  But the bank still has to do all the same work associated with originating and servicing the loan just as if it were for $200K -- all for less profit.  That's why some banks decline to make smaller mortgage loans.  Some of the banks I've talked to have mentioned $50K-$60K as their cutoff point.  I haven't heard a bank mention $75K being that point, but every bank is different.

If I were you, I'd ask around.  I'm sure you'll find one in your area that will provide such a loan. 

NOTE: I am not a lender.  I am only a small investor.  This is only my opinion, not a gold standard approved fact. :-)