ideas financing small loan $25K lower interest, primary home?

Question

Hi, I seem to be in a tricky place. I'm looking to buy a fixer home. I plan on selling my present home and have several potential buyers and I inherited a decent amount of cash in a sort of trust to make a long story short.. I also seem to be about $25 to 35K short on many places I've looked at recently.

Hard money in my area starts at 10%+ interest for 15 years. Most will not do primary residences last time I looked. Personal loans from banks start at about the same. Most banks in my area will not loan less than $150K on a mortgage. I did find one mortgage broker who could come up with a $50K loan at reasonable rates but that loan would exclude fixers. I did find one small bank that would loan as little as $25K with high points and a reasonable interest rate for 30 years but ONLY in a certain area and would exclude fixers. Anything outside that area they will not loan on, and prices in that area are higher than other places I'm looking at.

Does anyone have ideas for a $25 to $35 or even 50K loan for a fixer primary residence with lower interest rates (say 4.5 - 6.5%). Most homes I've looked at will not pass a bank's inspection without major repairs, some are old mobiles on their own land. I'm retired and I do need to keep the monthly payments very low and account for repairs/material.

This is very frustrating. I have excellent credit and +/-  85% cash towards a place, construction experience, and am having trouble financing. It would be easier for most people to go at it with no down payment and a much bigger loan.. Which I can't do.

Denver McClure · Answer

Hi @Lynn Harrison! I would consider using a Margin Loan (sometimes called Margin Line of Credit). You can access the loans if you have an Individual or Joint Taxable Investment account. Most of the time, the brokerage will allow you to borrow between 25-50% of your investment account value in cash, without selling any of your assets. You can use the Margin loan to help with down payments or renovation costs. It's a strategy I've used on my personal flips, and one that I build for my clients often. Interactive brokers has a good comparison on the current Margin Interest rates between multiple brokers. Right now you can get Margin Loans around 2-10% depending on the brokerage you use.

Feel free to PM me if you want if you have any questions. Happy to help!

Sol Romand · Answer

Did you think of 0% AR credit cards? I purchased a 4plex last year. It was a cash deal, all my money went there. I put $50,000 on a few credit cards and refinanced after 6 months. With your credit score and assets, you should be able to pull it off.

Sol Romand · Answer

Did you think of 0% APR credit cards? I purchased a 4plex last year. It was a cash deal, all my money went there. I put $50,000 on a few credit cards and refinanced after 6 months. With your credit score and assets, you should be able to pull it off.

Well it takes a few days to get the cards in the mail. If you call right after approval you sometimes can get them overnighted. There are 2 directions with taking out the equity. Different cards have different offers. The 0% on purchase requires a purchase, I paid my GC. He did add a 3% markup for the transaction. 0% on balance transfer will give you the ability to get the money out in cash. There is however a 3-5% fee for that. Hope this is helpful.

Denver McClure · Answer

Well Margin Loans are not tied to your house/property values, only to Individual/Joint Taxable accounts. These types of loans don't have the same requirements as conventional loans or HELOCs, so it's much easier to get. I would suggest you roll your cash flow or employment income into a taxable investment account, then use a Margin loan against your portfolio to do more deals.

Kevin Romines · Answer

Just don't put as much down so the loan size is big enough to work for the lenders that you already have good terms with. Yes the payments will be larger, but you will be holding back more cash and can cover those payments until the rehab is done and you refinance the loan with a local credit union. Credit unions are the typical place to get small loans that others cant fund due to the loan size. Go talk to all the local credit unions and they can fund the purchase and then refinance you when done?

I hope this helps?

Katre Kutti · Answer

@Sol Romand

How do you do that? Use credit cards to buy a house? … do they have to send you a $50 000 invoice and how can you use multiple credit cards to do that?

Lynn Harrison · Answer

Thanks Sol, I just called around and one of the Credit Unions suggested a private money loan and then refinancing under a home equity loan for 15 years at 3.99%. They said on a loan that small they just do a drive by inspection for property value. That's very good and do-able. I'd like a 20 year loan but I don't think it's possible. I could refinance with the HE loan within a month. Not sure about the CC's- I'd have to have them a while as it will potentially take quite a while to find the right property in this market, and the market is starting to stall as far as prices go.. Might be better to wait a bit. But I'm pretty sure I can get a HM loan within days.  .. I suppose I should double check on that..

EDIT, actually Sol, that could be an excellent idea. Looks like some 0% APR are for almost 2 years. Even with fees it might be cheaper than points on a HM loan. Thank you!

edit again QUESTION; how long did it take for you to get the actual cards? Looks like most only qualify for purchases within 60 - 120 days of applying for the card.. Or is it immediate when walking into the bank?

Lynn Harrison · Answer

thanks Denver, that's an excellent idea, although I won't have an investment account and all funds will be going to home and materials. BUT they may be able to loan on the house as collateral or refinance on that. Is there a name for a collateral loan like that? Do those loans require the same house conditions as conventional mortgages? I suppose the land value should be more than enough anyway..

ideas financing small loan $25K lower interest, primary home?

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