EasyMoney said:
Out of curiocity what would typically be the best mortgage for someone who is only going to live in a house for 2 or 3 years. What I'm thinking of doing isn't really flipping a house but buying a piece of crap living in it for 2 years while I fix it then sell it. I guess it is still technically flipping but much more slowly than what you think of when you think flipping. What type of mortgage could get me the lowest possible payments for those 2 years?
Easy: I am in the mortgage business and I also have investment properties. Based on the information you have given. If I were a young guy who wants to buy a house, fix it up and then sell it in two to three years here is what I would do. First of all I would make an offer above what I am willing to pay and have the seller pay 3% in closing costs and prepaids. I would then take out a mortgage for 100% of that purchase price. This will allow you to finance the entire cost of the mortgage and the closing costs. You could be into the house for less than $500. I would look at a loan that is geared towards first time home buyers like Fannie Mae's my community. (Fannie Mae and freddie Mac determine the programs and the "A" paper rates). This program has private mortgage insurance on it but it is significantly reduced. The rate on it for 100% financing is very competitive. There is a dicotomy going on in the market where the adjustable rate mortgages are about the same as the 30 year fixed so there is not much benifit to the arms. It is also easier to get approved throuhg fannie Mae on a fixed rate becasue of the level of risk is considered lower.
I would stay away from the negative amoritization loans, they carry a high rate relative to the market, most adjust every month, often times the broker puts a pre-payment penalty on them. The broker makes alot of money on the loan so they often times recommend them. It is just not a good product for most consumers.
Our company just got liscensed in Florida, if you want more info just ask a mod for my email and I can put a good faith together or would be willing to look at anything you have already started. I can also give you some other insight into how to best make money in real estate. I have helped other young people in my career and it is great to see where they are 5-10 years later after they have followed some of my advice.
GL
Northern Star
