All Forum Posts by: Steve Bugnacki

And to tack onto this, what about the closing costs? Closing the deal with cash will have closing costs but then to refinance to repay the HELOC will have another round of closing costs. This sounds like getting hit twice and just adding to the amount of the deal. Or am I looking at this wrong or missing something?

 @Steve Bugnacki   Your numbers are correct assuming you are using conventional financing. But, remember, you would have to get all the work done and the refinance closed before 6 months to use the delayed financing exception. Or, other wise you will now have to wait 12 months after purchase to use the new value.  (well, we have a way around that seasoning issue no matter what you do but most lenders will not so the plan needs to be get it closed with the 6 months.)

 Great idea cash is king. I only deal with cash buyers and they always get great deals ,So, I am thinking that once I know the number I

Yes, great strategy that my clients and I use personally. Just take note: I'm assuming your HELOC is variable rate and that 6.75% could change so make sure there is some buffer if you're running the numbers on long-term holds using HELOC funds.

How is your deal flow in CT?

Very helpful, Jay. Thank you. So if I paid $160,000 Cash (from HELOC) for a property, I would need to make sure the property will have an appraised value of $213,000 or higher after rehab which would enable me to meet the 75% LTV refinance parameter for a Fannie Delayed Financing loan. Am I looking at that correctly?

 @Steve Bugnacki  The most important part of any purchase using short term funds (Which lines of credit are as they do not have fixed rates) is your take out plan. In other words, you want to have how you are going to pay back the line of credit.  There are any number ways to do that but you need to understand your best path before you plunk down the cash.  For example, if you are looking to do a conventional loan as your take out you can use Fannie Mae's delayed financing exemption that will allow you to pull out UP to what you paid for the property or 75% loan to value which ever was lower within the first 6 months.   Fannie delayed financing  

But, if you plan on using a small credit union for example you would need to map out their requirements as they might be different. Same with a Debt service coverage ratio loan as there are 100's of dscr products and a lot have just slightly different requirements.  So, bottom line map it out BEFORE you buy. A COMPENTENT loan officer should be able to help you with.