punkorange said:
and fore those interested the house is only $23,000, probably requireing about $10,000 work for a total of $33,000.
It's in batesville, AR.
The secnario you've described here sounds like over half the loans I worked on in the last year.
Up front, let me say that until September of 2005, I was a lisenced Loan Officer in the state of Ohio. I am 100% certain that AR real estate laws are substnatially different from OH, and I KNOW the market there is different too.
I also know zlich about starting a business, so I'd listen to those that do.
As for the home loan. One thing I always mention to people is that there are dozens of ways to buy a home. Do some homework and find what works best for you.
You have said that you have a co-singer, so I'm assuming that you're trying to get a conventional, or BC loan with you as the applicant, and your co-signer as the co-app, right?
Obviously, you're going to get a slightly worse rate that way than if your credit was good enough to get the loan on your own. Have you exhausted the possibility of getting the loan yourself? Without knowing your exact financial details (which I DON'T want to know, as I am NOT lisenced in your state!) I can't say for certain, but be sure you talk to both a bank, as well as a mortgage broker. Rates and fees will differ!
Is this house you're looking at for sale by owner, or are you going through an agent? You can save a lot of money if you go FSBO, but there's more legwork required on your part.
Have you met the owner? See if you can. Tell the owner up front what you're looking to do with the house. See if they are willing to make concessions. It's a trivial matter for the seller to pay your 3% down, and just raise the price of the house by 3% to recoup his expense. I arranged this on almost every loan I wrote in the past year. People aren't always aware that it can be done, but once it's explained to them, it often works out to everyone's benefit.
If you are a first time home-buyer, you really need to look into getting a FHA loan. YOu will get the best interest rate possible, and they are not as concerned with your credit score, as much as they are with your past years payment history, and ability to make the proposed payment. However, you mentioed that this house needs work. If it has any sort of structural deficiency, you will have a TERRIBLE time trying to go with FHA. They inspect the house almost as much as they inspect the borrower! The same can be said for a VA loan, but if you are a veteran, it's worth looking into. If anything, VA offers an even stronger loan than FHA, and will often go to bat to have the seller make any needed repairs before the sale goes through!
What are the possibilities of buying this house through a land-contract scenario? If your co-applicant has sufficent credit to get the loan themselves, they will likely get a better rate without you on the loan at all. After that, it's a simple matter to have you added to the deed. You can take over the payments, and later refinance the home into your own name.
Speaking of re-finance. Since you say you're likely looking to draw the equity from this home to start a business. Don't overlook your payment options. While an adjustable rate mortgage is not usually an ideal situation for most people, if you're looking to re-fi in a few years anyway, why not take a 2/28 adjustable rate, and save yourself a point or two? The rate is fixed for the first two years, and you can always refi to a fixed term when you set up the equity withdrawal.
Lastly, let me caution you. No matter how nice a guy your banker/broker seems to be, remember that he's trying to make a living. Don't expect him to roll over and hand you a no-fee loan. It's not gonna happen.
However, on the same hand, make sure that your banker/broker is being up front about fees and costs. Be sure that everything is disclosed. Ask what kind of yield spread the broker is getting. If he's an honest dealer, he'll have no problem telling you. (And if he's getting more than 2-4 points of YSP, then he's taking you to the bank!) Be aware that banks are NOT required to disclose YSP, but an honest one will. If a broker tries to hide fees, etc. run away! They are crooked!
Above all, don't make snap decisions. Even if you think the deal sucks and you're planning to walk, don't bail too fast. It doesn't hurt you in any way to leave a deal simmering (as long as you don't have a dated purchase agreement, or other offers on the property). If you can take your time and let the lender simmer, they might find a better deal for you. This is especially true of brokers, as they can re-work your loan, and shop it to different lenders, and with different parameters.
I know this is a LOT of information to absorb, but keep your wits about you, and you should come out OK.
