How to get approved for a mortgage for an investment property? (loan, credit card)

[tanyaru]

Hello everyone and thanks for stopping by.

I want to get up to $125,000 mortgage for an investmnt property. As soon as the deal closes I`m going to put it back on the market. I`m working with a second party who is going to make a required down payment up to $20,000 so I can mention it when applying fo a loan. It is going to be only on my name. I make $50,000 a year and have a stable contract job (my current contract can be renewd in 3 years, until then I`m guaranteed the job). I have an excellent credit, a few credit cards with around $2000 debt.

How does that picture look to you??? Any advices or recommendations welcome.

[SuSuSushi]

Aren't you going to have to declare the down payment as a gift, since the partner's name won't be on the deed? Plus, since you're planning on flipping it...I don't think you've thought this fully through. This is not the time to be flipping properties. If you were going to hold onto it for a while, it might be good. But trying to turn it right around, you may very well lose your shirt.

[SmartMoney]

Any lender that offers investment financing is going to require the funds be that of the buyer. Do you own a home now? Have you looked into capital gains you may have to pay? If you are a contract job, be prepared to offer tax returns. A two year history of working on a contract basis will be needed in most cases, unless you are W2.

Also, you won't be able to flip it for at least 90 days after closing on it if you intend to attract the first time buyer market. FHA has hard and fast rules on private party flips.

My first impression, you are being asked to be a straw buyer for another person. If that is the case, do not participate. The other investor can go to jail and you would be stuck w/ a 125K loan in your name.

[bigtrees]

Originally Posted by tanyaru

Hello everyone and thanks for stopping by.

I want to get up to $125,000 mortgage for an investmnt property. As soon as the deal closes I`m going to put it back on the market. I`m working with a second party who is going to make a required down payment up to $20,000 so I can mention it when applying fo a loan. It is going to be only on my name. I make $50,000 a year and have a stable contract job (my current contract can be renewd in 3 years, until then I`m guaranteed the job). I have an excellent credit, a few credit cards with around $2000 debt.

How does that picture look to you??? Any advices or recommendations welcome.

Doesn't sound good to me. There's a bunch of problems with what you're talking about:

1) The money for the down payment must be "seasoned" money in your account. The lender will look at your past bank statements for 3-6 months to ensure no large deposits occured. In other words, your partner can't front the down payment for you.

2) You are a contract person with a temporary job. Your employer about your employment situation, and they will disclose it is a temporary position. It's generally difficult to get loans for people who have temporary employment.

[tanyaru]

Originally Posted by bigtrees

Doesn't sound good to me. There's a bunch of problems with what you're talking about:

1) The money for the down payment must be "seasoned" money in your account. The lender will look at your past bank statements for 3-6 months to ensure no large deposits occured. In other words, your partner can't front the down payment for you.

2) You are a contract person with a temporary job. Your employer about your employment situation, and they will disclose it is a temporary position. It's generally difficult to get loans for people who have temporary employment.

1) Lets say the money is a gift arriving soon

2) My job is military aka not temporary.

Thanks, your reply clarified some things for me.

[TimtheGuy]

Your $20k is a little short. You are going to need at least 20% down (25% + for the best deal) on an investment property. Plus closing costs unless the seller is going to pay them and even then there may be a restriction on how much the seller can pay (up to 2%??).

[ShanetheMortgageMan]

Gifts aren't permitted on investment properties, only for primary residences. Your partner is going to have to be on the mortgage, or add you to their account so the money is technically & legally yours.

[bigtrees]

Originally Posted by tanyaru

1) Lets say the money is a gift arriving soon

Where can I get a friend to give me $20k? The bank will require you sign a form stating that it is a gift and doesn't have to be returned. So your partner would be a sucker to sign the form.

Originally Posted by tanyaru

2) My job is military aka not temporary.

You said you have a 3 year contract that has to be renewed. That's temporary. Normal employment doesn't have set termination dates.

The problem is the bank needs to make sure you have the opportunity to earn enough to pay off the loan in full. A 3 year contract job doesn't tell the bank that - it tells them you can pay for the loan for 3 years.

[Smokipenelope]

Any advice on what to look for? I'm assuming that it should match up to the GFE provided originally? I've never done this before and am scared of making a mistake or finding extra costs that I am not prepared for at closing. Appreciate the recommendation to review the HUD first.

[ShanetheMortgageMan]

Smokipenelope I think you might've responded to the wrong thread.