A bit confused on refinancing....

BBandKK,
My understanding of it is you need to find a lender that does not require seasoning of the ownership and you are suppose to get the refi process happening before you even buy the property,That way when you make your purchase the paper work for the refi is set.(double check what I say)Rina has a post own what you ask!

NoMoneyDown!! Refi system running smoothly! Thought I’d share.
This was a long time in the process, but now that my team has done several, we have it down pat. The key is to finding and forming relationships with your key players, and the rest is just tweaking. Oh, and obviously finding great deals is part of the formula.

(I might be adding to or updating this outline as I have time or get questions)

One way to get rentals in your hands with NoMoneyDown!

1. Find a lender that will do refis without seasoning. (try the small local banks first!)

2. Find a killer FSBO deal that has not been marketed (this is important for eventual appraisal)

3. Get it under contract for 45-60 days.

4. Having found a lender to work with prior to your accepted offer, promptly request a refi on the property (should be able to find one giving at least 75-80% cash out), as it could take 45 days for paperwork, etc. Ask for what the FMV is, or higher (appraisal will determine what they‘ll give you). You will KNOW there is that much equity before you make your offer to the seller.

5. Bank will order title work and appraisal. Appraiser can complete the whole report, minus the actual name of owner. Will keep on-hold til it goes in your name.

6. Once the bank has everything it needs to set a closing date, you set the closing date with your seller (your PA should say on or before the 60-day date you had set).

7. Double-close on the property if possible, with your end refi $ from the bank covering the purchase of the property. OR, if they insist you have the title recorded in your name before handing you the refi $, cover yourself with private or hard money (which you would already have lined up) for those couple days. I have done it both ways.

Not only do you ed up with a cash-flow property with NMD, most of the time you will walk away from closing with a good chunk of $ in your pocket too!

This is working fantastic for me right now, so thought I’d pass it along. And I know there are some of you that have already done this or have found even better twists. Hope to hear from you as well!

Rina

Very interesting, thank you very much!

So the property gets refinanced for its appraised value? If I can use an example.. Someone buys a property for 100K while putting 10K down making the loan for 90K. It immediately gets refinanced at its appraised value of 120K. So that means the buyer gets its 10K back in his pocket but now has a new loan for 110K, essentially making it a no money down type thing? Am I even close or am I still missing something???

Property may get refi at 75% of app. value which is 90,000.

120,000 x75% = 90,000. Banks do not do anything immediately. As for LTV, now most banks are only lending 70% LTV or less on the purchase price. This is what I have been seeing more and more. Banks also have the luxury of not keeping their word, they may say yes today and after you make the deal say no. There are some good lenders out there but you must do your homework and when you find one please let me know, I will gladly pay you a finders fee.

Mike

I appreciate the comment Mike. The fact that banks will only do 75% totally slipped my mind somehow. I have been reading for days nonstop about this stuff so you would think that I would have caught onto that one! Its all starting to run together now I think. I just keep reading all these stories on here and in Dean's newsletters about people immediately refinancing and such like its a piece of cake and very beneficial. I was just having trouble understanding how it could be that easy, but of course like everything else in real estate, it takes research and hard work. Thanks again!!!

I believe in this Real Estate Business and this sight but sometimes we fall short when it comes to the dg family getting the right info, to the right poeple, at the right time. That's ok because it makes you work just a little hader. You can make it work. So BB and KK here's a refi deal I would love to make happen.

I found a nice house, 3bdr/1bat full basement 92,000
comps are 145,000-150,000
the house was empty for 2 yrs needs
about 12,000 in repairs, offer 73,600
offer accepted 12/30/09 must close in 30
days.Get loan 70% ltv
145,000 x70% = 101,500 - 73,600(buy house)
12,000(fix house)
85,600(total)
101,500 - 85,600 = 15,900 in pocket on front end
sell house for 135,000 or a little less still making about 30,000
Good deal but no deal because bank didn't keep their word. must find away to fund this deal. Thanks Mike

Yes that would be a great deal. So the hard part is finding a bank that will actually go through with the refinancing then?
You go through all of this hard work and then turn around and get lied to by lenders. Just doesn't seem right.
I have found a lot of properties that I think would be great deals even without the refi, I just cant seem to shake the nervousness and finally get to doing one.

You got to start somewhere, go check out those properties, walk around, look around act like you know what you are doing. Find out what the comps are the area, that's a must. How much will repairs cost, find a good realitor, they can help you with comps. Bottom line Fake IT Till YOU MAKE IT!
Even if you screw up a few times, use that as a learning opp.

Get in the Game

Mike

I also have found that lenders are refinancing closer to 70% of FMV. I was also just told today by one mortgage broker that they require ownership for 6 months before they will do a refi. Still making contacts to find one that works a little better for me as an investor.

Thanks guys. I just need to stop being afraid and jump in. Now I just have to decide on one to place my leap of faith. One dilemma is deciding on the importance of neighborhood. For instance, I am looking at 2 duplexes, both in great condition, needing no repairs. One at 65K has steady renters at $1050 a month. It was completely rehabbed and currently has a value of atleast 80K. The other is listed (and also valued at) 140K and has had the same renters for the last 4 years at $1600 a month combined. The main difference is location. The cheaper one is in a not so great neighborhood while the more expensive one is in a bit nicer one. To me both would be a good investment. Is the nicer neighborhood worth paying that much more for a duplex?

No matter what the lenders are saying you must keep making contacts untill you find the rigth one. There must be some lenders that will work with us. The Dg family has lots of succes stories that prove it.

MIKE

Networking and making contacts has never been a strong suit of mine but I have been working really hard to change that. I have been trying to get on here as much as possible and read and chat with people that have been through this and I know it will pay off one day.

Here are a couple of tips I would use to see what I could do with a bank.
First, make a list of all the small local banks and credit unions.
Sencond, create a list of question to ask.
1. Do you do no title season refinances or purchases loans.
2. What is the loan to value you lend up to (80% will be the highest)
3. Will you do your own appraisal for the refi.
4. Find out what you would need to do to pre-qualify
With this information already gathered you know the best bank to go to for a refi.

Hello BBandKK

My biggest concern here would be how much WILL the property rent for? Then I would backtrack to see how much of a mortgage that rental income could support. I would also base that mortgage payment on PITI..(principle, interest,taxes, insurance)then to cover all my bases id factor in a home warranty plan per yer and average that cost per month. I would not be willing to carry a negative cash flow of more than $25 per month on the property if I could afford it.

Sure you can do a refi after closing if you meet the banks criteria, however how much is their mortgage going to cost you per month to include all the closing cost fees you will pay? Just some of my thoughts if this were MY deal

Incredible information! Now I just need to jump into my first deal!!!

Thank you all!!!!!