Posted on: 12th Jun, 2009 10:39 pm
Hi. My wife and I are looking to buy a house in San Francisco, but we are self-employed and unable to qualify for any kind of conventional mortgage (at least that's what a mortgage broker told us).
However, our business is doing well, and I would imagine that within the next two years or so, we will be able to put down a 30% downpayment on a $700-800k property. My understanding is that if you can afford a large enough downpayment, at some point income and credit rating become irrelevant for certain kinds of lenders--i.e., "private money" or "hard money" lenders.
So I'm wondering what kind of private/hard money mortgages are available out there--or, for that matter, what kinds of loans are there in general for people like us who are unwilling or unable to document income. Is it true that private-money lenders generally prefer to lend on income property (knowing that the rents will pay the interest)? Are there longer-term private-money loans (say, 15-20 years) or are they all short term? Also--when bank interest rates go up, do private-money interest rates follow, or are they pretty much always at 10-15% regardless of what's happening with the interest rates of traditional mortgages?
I apologize that this question is a little all over the place, but I'm just looking to start a discussion on what options are out there for people in our situation (of which I'm sure there are many). Thanks in advance.
However, our business is doing well, and I would imagine that within the next two years or so, we will be able to put down a 30% downpayment on a $700-800k property. My understanding is that if you can afford a large enough downpayment, at some point income and credit rating become irrelevant for certain kinds of lenders--i.e., "private money" or "hard money" lenders.
So I'm wondering what kind of private/hard money mortgages are available out there--or, for that matter, what kinds of loans are there in general for people like us who are unwilling or unable to document income. Is it true that private-money lenders generally prefer to lend on income property (knowing that the rents will pay the interest)? Are there longer-term private-money loans (say, 15-20 years) or are they all short term? Also--when bank interest rates go up, do private-money interest rates follow, or are they pretty much always at 10-15% regardless of what's happening with the interest rates of traditional mortgages?
I apologize that this question is a little all over the place, but I'm just looking to start a discussion on what options are out there for people in our situation (of which I'm sure there are many). Thanks in advance.
We can document fairly substantial revenues (c 2-300k per year), but very low income (we literally live our business, so we are legitimately able to write off a lot of stuff). Not sure if that helps us in any way.
SFRenter
What you really need is a "stated income" loan. There are VERY FEW lenders remaining in California who will consider originating a loan without income documentation. I do know of a lender who does, however they are very particular about where the property is located.
Regarding hard money lenders...
You would need a larger down payment and your rate would be over 10%. This option on a loan amount of $500k would cost you $50k per year in interest. You could probably rent for half that in the San Fran area AND keep your down payment.
What you really need is a "stated income" loan. There are VERY FEW lenders remaining in California who will consider originating a loan without income documentation. I do know of a lender who does, however they are very particular about where the property is located.
Regarding hard money lenders...
You would need a larger down payment and your rate would be over 10%. This option on a loan amount of $500k would cost you $50k per year in interest. You could probably rent for half that in the San Fran area AND keep your down payment.
