OfflineI was hoping some of the finance experts could help me with a banking question:
Q: If I were to purchase a property valued at $100,000 for $75,000, and it was OWNER financed; how long would it be before the a conventional bank would refinance the loan?
Q: If the property appraised at $100,000 on the refinance, would they finance 75% of the value ($75,000)?
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First Q- it all depends on the bank and THEIR policies. If they have a no season refi policy or not. Remember the value you feel the property is -may not be what the bank appraises it at to get their LTV ( loan to value).
Second Q- it all depends on the banks LTV in their policy. Some finance 75% and some 80 or other set percentage. Keepin mind different banks have different policies and Psalm only refinance on the purchase price and others will finance on the appraised value. So be sure to do your homework when you find the bank to work with. The best idea is to find a small local bank that has no seasoning refinances. The ones that a refinance instantly after you buy so you don't have to wait six months or a year to refi.
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Joe - the answers above are spot on. Call around to banks to get their terms. A lot of how much you can finance depends on whether it's owner occupied or investment. The secondary factors include standard items like credit score and debt to income ratios.
Keep in mind if it's appraised at $100k and you buy it for $75k, $75k becomes the new comp - it's what someone was willing to pay for it. Now if in a year the comparable houses are worth $100k, then the bank may consider that in the appraisal.
Again- call around.
Good luck!
- Tom
Thanks everyone. This message board has been VERY helpful for me. Happy Holidays!