Institutional Lending getting tougher, Enter the realm of Creative Financing.

Posted by Winston Hahne on March 15, 2011 at 11:35pm

I have been speaking with a lot of my mortgage broker friends and they are all despondent and depressed.Apparently some bank regulations are kicking in on April 1st.From what they're telling me, broker compensation from banks such as Bank of America,Wells Fargo, Chase, Citi ect...will be severly curtailed.This,they(brokers) believe will help with the demise of their industry.Looks like the "Government" sponsored crony banks want the consumer to deal directly with them for everything.I will post better details once I can verify the specific regs.

Also, FHA mortgage insurance premiums are jumping from .9% of loan per year to 1.4% of loan per year as of April 15,2011.
As an example $200,000 loan FHA, the premiums currently are approx; $1,800/year or $150/month. it will go up to $2,800/year or $233/month . Keep in mind the premiums used to be .5% or $1,000/yr or $84/mo. Rates may be low but everything else is going up(except incomes and the value of our fiat currency)

Banks are also looking for six months mortgage PITI reserves for each property owned.If you are a brand new landlord,no dice !!!They want to see 2 years tax returns showing your rental property income.

The above are reasons enough for you to learn creative financing.

Want to read a real-life example?

Stay tuned,In my next blog I'll show one I did in December.

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Comments

Brian Mann May 12, 2011 at 10:10am

Winston, it is going to be a good thing for those of us who know how to structure creative transactions. That is another reason everyone in the group who is serious about making money in real estate should be going to the cashflowdepot convention next weekend. Education like this is sooooo inexpensive and the amount of knowledge is outstanding. Thanks Winston.
Hardmoney

Joel Kraut April 30, 2011 at 5:19pm

If you have Landlord friends with cash flowing buildings that want to cash out refi send my way, I have a few NON FHA lenders that I work with and can do loans in the 2 points, 65-70% of appraised value at about 6.5-7% range right now.

If they own them for a couple of months even as short as 90 days and they are up and running cash flow wise, the owners personal credit is pretty good and they have experience we can get them done in about 45 days.
Arsene Remy March 24, 2011 at 1:04am

I just read an article on a similar topic in Worth Magazine. Creative financing , or as they call it... "black market financing" has already become the new norm in funding.

Thanks for the heads-up.

This reply was deleted.

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