Author Topic: Can't find a small mortgage!!!!  (Read 6289 times)

SwordGuy

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Can't find a small mortgage!!!!
« on: October 02, 2014, 04:54:50 AM »
I'm trying to buy an inexpensive house on a 15 or 30 year mortgage in the $35,000 to $50,000 price range.

I can't find anyone who will offer a mortgage that small!

We have a top 6% income, almost a top 10% wealth, zero debt and an awesome credit rating.

Anyone know of a company that provides mortgages in that price range?

AlanStache

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Re: Can't find a small mortgage!!!!
« Reply #1 on: October 02, 2014, 05:43:08 AM »
Try the zillow.com mortgage rate search tool.  Just tried and 50k home for my area with 20% down gave three rates all from Citi.

But you are sure it is worth getting a loan given that fees are lost money + inspection etc?  If your net worth is that high paying cash might easier/cheaper?  not know your details, but am sure you looked at the options, you probably like where your money is now.

EDIT: if you are buying multiple cheap homes could one larger business loan work?
« Last Edit: October 02, 2014, 05:45:39 AM by AlanStache »

jnc

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Re: Can't find a small mortgage!!!!
« Reply #2 on: October 02, 2014, 07:19:33 AM »
I have done many loans under 50k and while the fees are a bit higher, there are definitely lenders that would do those.

Do you have any realtor contacts? Ask them for recommendations in your area.

I am currently using "supreme lending" for a property in Memphis. You could check out their website and see if they service your area.

waltworks

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Re: Can't find a small mortgage!!!!
« Reply #3 on: October 02, 2014, 07:32:16 AM »
In your situation I'd just pay cash or HELOC another property and then pay cash if you want to borrow money that badly.

-W

MillenialMustache

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Re: Can't find a small mortgage!!!!
« Reply #4 on: October 02, 2014, 07:37:12 AM »
I was also going to suggest Supreme Lending, as that is who I used for a $55,000 mortgage a few years ago and they were the only place that did not bat an eye about it. They are a mortgage broker, so once the deal is done they will sell the mortgage to a bank. My first mortgage was sold to Wells Fargo, so it worked out fine.

arebelspy

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Re: Can't find a small mortgage!!!!
« Reply #5 on: October 02, 2014, 08:28:18 AM »
Many of the national ones won't, but smaller local banks and/or credit unions will.  Start calling the banks where the house is located.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
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Poorman

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Re: Can't find a small mortgage!!!!
« Reply #6 on: October 02, 2014, 01:23:00 PM »
Union Bank
Aim Loan
Pen Fed

Distshore

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Re: Can't find a small mortgage!!!!
« Reply #7 on: October 02, 2014, 05:33:46 PM »
At that level the establishment costs are going to be a big chunk, maybe even 15% of loan value.  Is there another loan method you can use instead eg. LOC on another property?


SwordGuy

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Re: Can't find a small mortgage!!!!
« Reply #8 on: October 02, 2014, 06:07:51 PM »
PenFed has 5/5 arm, 15 yr home equity loan that eats all fees but notary and appraisal if I don't pay off the loan before 3 years.

Quicken has a 5/1 arm, 15 yr home equity loan that has (to my mind) crazy fees but costs the same over the expected time I intend to keep the loan in play (because the rate is lower).

Neither had anything as a direct mortgage on the investment property.

At this point, I'm tempted to break into a 1% CD and pay cash, then take out a 70% home equity LOC on the new property or a 30% home equity LOC on our main house, depending.  That way, we don't have too much of our ready cash sunk into a single rental property.
If we can time the loan so it can kick in before we have to pay for the house, we can skip using the CD (although I would prefer the loan to be against the rental house and not our main one).

Thanks for the lead on Supreme Lending.  I've sent them a contact message.

I'll try another bank tomorrow.

SwordGuy

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Re: Can't find a small mortgage!!!!
« Reply #9 on: October 05, 2014, 10:00:50 AM »
Still no luck on the small mortgage...

dragoncar

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Re: Can't find a small mortgage!!!!
« Reply #10 on: October 07, 2014, 10:45:35 PM »
Why don't you just buy it outright?  If you are considering a portfolio, maybe a local bank would be more willing to work on the entire portfolio?

Bobberth

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Re: Can't find a small mortgage!!!!
« Reply #11 on: October 08, 2014, 01:24:35 PM »
If you have near top 10% in wealth-what is that wealth?  You can try the HELOC like mentioned if it's real estate or if you have taxable investment accounts, you may try to get a loan collateralized by your investments.  If you have mainly retirement accounts, you can't do this but if you have taxable accounts, you can.  Just like a HELOC for your investments.  If you have a business, you may be able to get a loan based on that.  Talk to a local bank's commercial department.  From what I have seen, most of their loans are held in house and are more flexible if you have enough assets.  If you're looking for 30 year term and rates, I think you will continue to have a hard time finding something.

SwordGuy

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Re: Can't find a small mortgage!!!!
« Reply #12 on: October 12, 2014, 12:44:52 PM »
Most of our investable assets are in 401Ks or in our paid-off house.

We have enough to buy a property outright, but not 5 or 6 like we could if we could get mortgages on them.

We've gone thru several local loan officers and so far the lowest they will go is $40,000 - and the house has to be fixed up so "as is" sales won't work.

We've got calls into commercial branches and hopefully we'll hear back from them next week.

Our desire is to get 5 to 6 rentals over the next 5 years but also continue to pump money into Vanguard index funds.   We can't do both if we have to pay cash for them all.   

Right now, we would have to purchase more expensive properties in order to get a mortgage, but that would make them harder to make money off of. 

We'll keep slogging thru the financial options.

waltworks

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Re: Can't find a small mortgage!!!!
« Reply #13 on: October 12, 2014, 12:54:02 PM »
Maybe I missed this - why aren't you just HELOCing the paid-off house?

-W

SwordGuy

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Re: Can't find a small mortgage!!!!
« Reply #14 on: October 12, 2014, 01:22:31 PM »
Maybe I missed this - why aren't you just HELOCing the paid-off house?

Our main residence has a finite amount of capital in it to draw upon.  Plus, if things go badly, it's easier to walk away from a rental property than my own home.

Another option is to take out a HELOC on the newly acquired property.  We may go down that path but I think the fees to purchase a place for cash and then take out a HELOC will be higher than just a simple mortgage up front.  Then again I may be wrong.  We're still investigating.




waltworks

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Re: Can't find a small mortgage!!!!
« Reply #15 on: October 12, 2014, 02:05:22 PM »
If you are that risk averse, I'm not sure leveraged real estate is a great idea. How badly would things have to go for you to lose your house? It might be worth sitting down and drawing up some spreadsheets and see under what scenarios you lose your house. I'm guessing if you've got it paid off and have other investments, plus are posting here, it would basically require a great depression type scenario for you to be in any danger.

-W

Maybe I missed this - why aren't you just HELOCing the paid-off house?

Our main residence has a finite amount of capital in it to draw upon.  Plus, if things go badly, it's easier to walk away from a rental property than my own home.

Another option is to take out a HELOC on the newly acquired property.  We may go down that path but I think the fees to purchase a place for cash and then take out a HELOC will be higher than just a simple mortgage up front.  Then again I may be wrong.  We're still investigating.

SwordGuy

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Re: Can't find a small mortgage!!!!
« Reply #16 on: October 12, 2014, 03:03:09 PM »
I like to plan for best and worst case scenarios, then decide how much risk to take on.

Looking for 15 or 30 yr mortgages directly on the rental properties is one way to do that.  There are, of course, other ways.   In theory, going this route **ought** to have been simpler...

Right now, we're getting a rental in the same town we are in.  It's a way to mitigate risk and keep costs lower.
However, getting 6 or more leveraged houses in the same town makes our rental portfolio subject to localized downturns.   One such SCHEDULED downturn is when the 2016 BRAC (Base Re-alignment And Closure) decisions are made.  It's not unlikely that the military town we're in could drop in population by thousands of renters (with the corresponding side-effects felt throughout the area).   We might also gain population, but it's a major, near-term potential impact on our area that is totally not in our control.

One way to mitigate risk is to get some of the next rentals in a different town.   We're exploring doing that in the small town our son lives in some 6 hours away.   We can hire a property management company for the first year and then have our son take over after learning the ropes.   That gives us a competent, trusted agent to look after our (and eventually his) assets in the area.   It's not a booming area but it has been growing over the years.

We could go ARebelSpy's route of getting properties all over the place but we're too ignorant to go down that path yet.  Maybe after we get our 2nd property and know more.

I can get work **somewhere** fairly quickly.  I'm good at what I do and I make sure that what I'm good at is in demand.   Getting work close to where my wife is working can be more difficult, particularly in the localized downturn I mentioned.  My wife, given her field of work, is highly unlikely to find another full time job in a hurry.  Given her age, it will probably never happen, so she's tied here until she retires.

Right now she's working because she enjoys it and it will help me retire earlier.  (She's 10 years older than I am and could retire at any time and go on SS.)

I don't mind taking on some risk of leveraged real estate, I just want to minimize the cost and risk when I do so. :)

jnc

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Re: Can't find a small mortgage!!!!
« Reply #17 on: October 14, 2014, 04:24:17 AM »
Other than the price of 30k to 50k which you have mentioned, you have not mentioned any specifics as to the return that you are expecting to get on the rental property. It is hard to consider the trade-offs that you mention (breaking into 1% CD, getting a HELOC, etc...) without having a clear idea of your return on the rental.

dfrei

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Re: Can't find a small mortgage!!!!
« Reply #18 on: October 17, 2014, 03:21:54 PM »
Try Citimortgage. I just financed a $36k rental property through them a few months ago. They were easy to work with and got it done.

SwordGuy

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Re: Can't find a small mortgage!!!!
« Reply #19 on: October 17, 2014, 09:40:50 PM »
Try Citimortgage. I just financed a $36k rental property through them a few months ago. They were easy to work with and got it done.

Thanks for the tip, I'll contact them!

MoustacheDArgent

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Re: Can't find a small mortgage!!!!
« Reply #20 on: October 22, 2014, 09:36:27 PM »
http://www.aimloan.com/    will do mortgages down to 30K

Poorman

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Re: Can't find a small mortgage!!!!
« Reply #21 on: October 24, 2014, 12:52:57 PM »
http://www.aimloan.com/    will do mortgages down to 30K

Yep, I'm getting a $48k mortgage from them right now.