Dearborn Financing Secrets of a Millionaire Real Estate Investor 2003_5

Tham khảo tài liệu dearborn financing secrets of a millionaire real estate investor 2003_5, tài chính - ngân hàng, tài chính doanh nghiệp phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả
Nội dung trích xuất từ tài liệu:
Dearborn Financing Secrets of a Millionaire Real Estate Investor 2003_574 FINA NCING SECRETS OF A MILLIONAIRE REAL ESTATE IN VESTOR Some loans are called “no ratio” loans, in that you don’t have to justify your total debt (mortgages plus other continuing obligations, such as car loans and student loans) compared to your income. Few, if any loans are true “no documentation” loans. Most of these offered programs are bait and switch tactics: The lender says they don’t need documentation, but when the loan is being processed, the lender will ask for more and more documentation. Often, the lender will see some red f lags that trigger the additional inquiry. The best defense to these tactics is a good offense; speak to your lender or mortgage broker up front. Identify documentation issues up front, educate the lender about your finances, and be truthful. The more a lender suspects you are hiding something, the more documen- tation the lender will ask for. Here is a real-world example: Carteret Mortgage, , lists the following general guidelines for one of its no-ratio mortgage loans: • Minimum middle credit score must be 640. • Five credit accounts are required; three may be from alterna- tive sources—utility, auto insurance, etc. • Bankruptcy and foreclosures must be discharged for three years with reestablished credit. • Two years’ employment with same employer. • Two months’ PITI reserves are required with an LTV less than 80 percent. Six months’ reserves are required otherwise. • 10 percent minimum down payment is required from your own funds. No gifts. You should ask for this kind of information up front from your mortgage broker or lender. The more information you know about what a lender needs, the more information you can provide. 75 5 / Creative Financing through Institutional Lenders Watch What You Say on NI V Loans Just because you don’t have to provide documen- tation of your income to the lender, it doesn’t mean you have a license to lie. Most lenders will make you sign an authorization to release federal income tax returns. They may not check now, but if your loan goes into default, they may obtain cop- ies of your tax returns. If the income you report on your loan application is way out of sync with your tax returns, you may be answering to loan fraud charges.Develop a Loan Package You should present a loan package of your own to any new lender. This package should include the following: • Your completed FNMA Form 1003 loan application (See Ap- pendix C.) • A recent copy of your credit report, with written explanations of negative information • A copy of the purchase contract for the subject property • A copy of the down payment check and documented proof of where it came from • Copies of recent tax returns, pay stubs, and W-2s (if applica- ble) • Recent appraisal of the property if you have one, or a market analysis prepared by a real estate agent • Copies of existing leases or information of rental value of sim- ilar properties76 FINA NCING SECRETS OF A MILLIONAIRE REAL ESTATE IN VESTOR • Copies of recent bank statements, retirement plan accounts, and brokerage accounts • Any other relevant financial information concerning assets or liabilities. • References from other bankers, lenders, or prominent mem- bers of your community, such as a judge, politician, or bank president The more information you provide up front, the less surprises the lender runs into, and hence the less likely it will be suspicious and ask for more documentation.Subordination and Substitution of Collateral Subordination is asking someone who holds a mortgage (or deed of trust) on your property to agree to make his or her lien sub- ordinate, or second in line, to another lien. For example, suppose you own a property worth $100,000 that has a first mortgage to ABC Sav- ings Bank for $65,000. If you want to borrow $30,000 from First National Bank secured by a second mortgage, you would have to pay a much higher interest rate because First National’s mortgage would be subordinate, or second, to the lien in favor of ABC ...