Personal Loan

[NJAbroad]

Hello,

I need some advice.  I am looking at purchasing a condo in GA probably late 2016 early 2017.  The only problem is that the condos I've looked at range between $35-$40K and mortgage companies usually don't go that low.  This would be an investment property and I have what I believe would be a genius plan to purchase.  I am looking for your input.


The plan:
- Take out a personal loan for $35K-$45K @ 8.99%-9.9% / 5-7 years
- Do a refinance / cash out refinance (dependent on situation) for the $35K-$45K @ 2.95% / 15 years
- Pay off the personal loan
- Do it again...... and again

My questions to those in the know:
- will banks refinance sub $50K loans?
- is this method feasible?

[Drifterrider]

My question is:  Where are you going to get an unsecured loan for 10% or less?  Banks do ask what is the purpose of the loan.

You say it will be an investment property.  Rental? 

Last year I applied and was qualified for a investment (rental) loan at 80% which would have given me $36K. 

I think you should re-evaluate your plan.  If you don't plan to buy for at least one year, use that year to increase your savings:  don't use it paying interest.  A 5 year ARM can be paid back in 5 years with no penalty.

[cripzychiken]

Talk to the condo association or a relator in the area, there might be come smaller mortgage companies that go that low.  But I don't see how you can buy a place for $40k and not get a mortgage, but then turn around and refi it.  I feel like if you can Refi, you can easily just go and get the mortgage the same way, but that is just a guess.

[NJAbroad]

My question is:  Where are you going to get an unsecured loan for 10% or less?  Banks do ask what is the purpose of the loan.

You say it will be an investment property.  Rental? 

Last year I applied and was qualified for a investment (rental) loan at 80% which would have given me $36K. 

I think you should re-evaluate your plan.  If you don't plan to buy for at least one year, use that year to increase your savings:  don't use it paying interest.  A 5 year ARM can be paid back in 5 years with no penalty.

Drifterrider,

I would prefer to do a mortgage.  20% down on a $35K property would not be a problem in a year or so.  I have been inquiring with several banks online (specifically because I live in Germany) USAA, Andrews Federal, Quicken & etc and they have all said they don't loan below $50K.  So if I found a property with good numbers for $40K -$50K, a mortgage would still be out of the question with 20% down.

Talk to the condo association or a relator in the area, there might be come smaller mortgage companies that go that low.  But I don't see how you can buy a place for $40k and not get a mortgage, but then turn around and refi it.  I feel like if you can Refi, you can easily just go and get the mortgage the same way, but that is just a guess.

Crispzychiken,

  I will look into the condo associations.  I need to speak with them anyway to make sure rentals are authorized.  I was not sure on the banks stance on refi's.  I sent emails today but haven't heard back yet.  I thought I'd reach out to you guys to see if anyone has refi'd a loan sub $50K. 

[CashFlowDiaries]

you might be able to get a loan of that size from lendingClub or prosper.  Its p2p lending.  Ive never done it but ive read about people that have and used the money to flip houses.

[NJAbroad]

you might be able to get a loan of that size from lendingClub or prosper.  Its p2p lending.  Ive never done it but ive read about people that have and used the money to flip houses.

Thanks.  That was on my list of lenders.  However, being overseas they won't even let me make an account.  I'm sure I will have better results when I get back stateside but that is in four years from now.  I was hoping to have 1 maybe even 2 rentals locked down before then.

[Drifterrider]

Drifterrider,

I would prefer to do a mortgage.  20% down on a $35K property would not be a problem in a year or so.  I have been inquiring with several banks online (specifically because I live in Germany) USAA, Andrews Federal, Quicken & etc and they have all said they don't loan below $50K.  So if I found a property with good numbers for $40K -$50K, a mortgage would still be out of the question with 20% down. 

 
Check with NFCU (Navy Federal Credit Union).  Also, if there are 35K properties in the area you are leaning towards, SOMEBODY (a bank, etc) does mortages for those amounts. 

You might have to go for a shorter term than 30 years (a co-worker is refinancing with a ten year fixed rate).

Where in Germany do you live?  I lived in Wiesbaden for 7 years, Hanau for 2 years and Berlin for 2 years.  LOVED IT.

Sometimes local banks will do better deals than far away institutions.  They know the market and if houses are selling for 35K, they are loaning money to someone.  Also, with a 20% or more down (and good FICO) local institutions are more ready to work with you. 

[NJAbroad]

Drifterrider,

I would prefer to do a mortgage.  20% down on a $35K property would not be a problem in a year or so.  I have been inquiring with several banks online (specifically because I live in Germany) USAA, Andrews Federal, Quicken & etc and they have all said they don't loan below $50K.  So if I found a property with good numbers for $40K -$50K, a mortgage would still be out of the question with 20% down. 

Check with NFCU (Navy Federal Credit Union).  Also, if there are 35K properties in the area you are leaning towards, SOMEBODY (a bank, etc) does mortages for those amounts. 

You might have to go for a shorter term than 30 years (a co-worker is refinancing with a ten year fixed rate).

Where in Germany do you live?  I lived in Wiesbaden for 7 years, Hanau for 2 years and Berlin for 2 years.  LOVED IT.

Sometimes local banks will do better deals than far away institutions.  They know the market and if houses are selling for 35K, they are loaning money to someone.  Also, with a 20% or more down (and good FICO) local institutions are more ready to work with you.

Hey Drifterrider,

I will reach out to Navy Federal Credit Union.  I have not spoken to them yet.  My credit score is teetering around 770-780 and next year I will be comfortable putting down 20% + closing costs on a $40K-$50K property.

My wife and I are in Geilenkirchen Germany.  We were in Stuttgart Germany for 3 years prior to this assignment. 

[NJAbroad]

Drifterrider,

Thanks for the info on Navy Federal Credit Union.  I spoke with them via chat yesterday, and they can help.  They offer Investment loans as low as $10K.  The only caveat is that they want 25% down and only service 15 year investment loans which is no problem for me.  They also had good rates.  Currently they are offering 3.875% on a 15yr investment mortgage.  We'll see what the rates are in 2017 when I am ready to invest.  Again, thanks for the info!

[Drifterrider]

I recommend you get an account with them if no more than to establish an account.  Sometimes they have GREAT deals.  I have a one year CD maturing this week.  The rate was 4.88%.  Unfortunately, the max investment was $5,000 and they no longer offer that rate.

It pays to watch.  I bought my primary residence from them post crash in 2008 at 6%.  Two years later the rate dropped to 4% (for one day only).  I had been checking rates every day up to that point.