Tuesday, April 05, 2005
Major Snag in Offer #6
I just got off the phone with my loan officer (the actual head guy, and not the lady I've been dealing with recently). He is telling me that due to the loan showing negtive cash flow for the area, the lender is requiring I put down 5%. Now, the issue isn't bad in the long run, because I can refinance and get the money back. The problem is I now have to come up with 5% in addition to the ~$2k for closing costs. He said an alternative would be to go with another lender, but I would almost definately have to pay a prepay penalty - IF I refinance the loan. Now I have a delimma to weigh. I either pay 5% upfront and refinance a short time later to pull it back out, or I go with someone else and disregard any refinancing. I guess I'll have to come up with a list of questions to ask, such as what if I go with another lender and sell the property in two months - will I still have to pay a prepay penalty? And, does 100% of the 5% the original lender is asking go towards the principal, or does some fees come out of that? Ugh. I can't wait until financing doesn't become a big issue with my deals.
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3 comments:
Wow.. Lots of work and little snags.. But keep at it! Think of all the experience you're getting! :-) It'll get easier with time.
Soon you'll have enough equity in your holdings that lending won't be an issue. You'll have money to hire out the tedious footwork. Stay the course. Remember it is just a numbers game. Hang in there.
Wow, a lot of comments in a short period of time. Before I reply, I would like to add that one of the things the loan officer told me was that the lender did a rent analysis of the property and came back with a figure of $1,150. This was good news, because that was the figure I arrived at. I bumped it up almost $50 on the lease part of my L/O offer.
Shaun - Thanks. I keep thinking of the end result and how all these headaches now will disappear eventually. It's almost like running a marathon with the highs and lows, and knowing it will all pay off if you keep going.
nneka - Thanks as well. I didn't realize so many people actually read my blog. :) I am seriously considering going with another lender, only because the 5% downpay will tie-up a lot of reserves (even though it should only be a month or two they hold it). I'm not too worried about the prepay penalities as I had already calculated them into my end profit. You're right about more unknowns. It seems every week - (actually, every DAY) - something else pops up with this deal.
richard - And, lastly, but not leastly, thank you. I can definately see how newbies quickly lose interest in this venture. I usually see things to the end, and this is no exception. It definately helps knowing there are people such as you, nneka, Shaun, Brian, Mike, et al, out there who can give moral support and valuable guidance!
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