All Forum Posts by: Stephanie Medellin

The issue you're going to have with this plan is that your FHA lender's guidelines aren't going to permit you to borrow your down payment from a private lender. They will want a minimum contribution of 3.5%.

The good news is that you do have some options. 

You could ask for a gift from family for the down payment.  That is permitted.  For closing costs you can pay a slightly higher rate and get a lender credit. 

The other option would be to look into down payment assistance programs. You may need to agree to live in the home longer than 1 year with one of these programs, but a government or non profit down payment loan or grant is the only kind of second loan permitted with FHA.

@Dante Devine Portfolio products are loans that won't be sold to Fannie or Freddie so they will have more flexible guidelines.

For owner occupied properties or second homes, you can borrow up to 90%, with no MI, up to $2,500,000 loan amount. For investment properties 85% LTV is available up to a $1.5 loan amount. These are portfolio products.

Most, if not all, banks should be open to a cash-out refinance. At 60% LTV you should be able to get a very competitive rate. You can use the cash for any purpose.

You will have to qualify as with any other loan as far as income/employment and credit. 

@Anh N. A title company might agree to give you that information as a courtesy, but I'm really not sure.  It's worth a quick phone call.

One thought I had in regards to this situation - usually if there is a loan that is delinquent, many times the lender will step in and pay the property taxes to keep them current, so as not to lose their investment to a tax foreclosure.  Same for insurance - if the homeowner lets their insurance policy lapse, the lender will go ahead and take out a policy for the home, adding the cost to the delinquent amount of payments owed.  They will also many times hire a property preservation company if they determine that the home has been vacated.  You will usually see a notice posted on the door when this happens.  If they are very far behind in taxes, there is a chance there is no loan on the home.  This is merely an observation and by no means a hard and fast rule for this type of situation.  Definitely do your due diligence!

@Account Closed I know this is an old thread, but if you have not already purchased a home, there are new 3% down conventional programs available that you may want to consider as an alternative to FHA. These have lower mortgage insurance rates too.

I don't believe that independently paying someone else's delinquent property taxes would give you any right to put a lien on their home without their permission.  The only party that can go after homeowners for not paying taxes is the local government.

It would be much better if you could contact them to see if they are willing to sell.  Do you know if there is currently a loan on the property?

Currently Fannie is 10 and Freddie is 6.  Only 1-4 unit properties count in this total, and if there are multiple borrowers on the loan, the total of all properties owned by all borrowers will apply.

Hi Mary,

That's great you have a nice cushion of savings available.  I would proceed with extreme caution before sending in that money, as I agree with what

@Eric Black said above.  If you send in that money they will just apply it to principal, and your regularly scheduled payments will still be due each month.  If this happens, they will not refund you that money.  

On the off chance that they do allow the arrangement you described, since you're not pre-paying any principal, your balance will not be reduced and it wouldn't save you any interest off the life of the loan.  Maybe you could set up a bank account with those funds and just have the payment auto deducted every month so you won't have to think about it.

Nicole I don't know about this specific lender but for any lender they will have to be licensed in the same state where the financed property is located.  You can live out of state.