Getting a Mortgage for a "flipped" property

[boatboy]

I plan to buy a property in the next months that I want to flip.

I have never got a mortgage before so i was wondering what should I look/ask for from the lender. Some people have told me to make sure there aren't any penalties for paying it off early but what does this mean? Also, when you do sell the house what are the costs for closing the mortgage?

please respond, thanks.
Dave

[LOTrainer]

I plan to buy a property in the next months that I want to flip.

I have never got a mortgage before so i was wondering what should I look/ask for from the lender. Some people have told me to make sure there aren't any penalties for paying it off early but what does this mean? Also, when you do sell the house what are the costs for closing the mortgage?

please respond, thanks.
Dave

Dave, excellent questions, and my response is: ask any question that you can think of when you speak with a mortgage professional! You need to be fully confident in the loan and the loan officer that you choose.

The penalty that you are referring to is a Pre-Payment Penalty (PPP). Usually, the terms range in 1-3 years, and have typically been applied to subprime loans. There are quite a few in's and out's when it comes to PPP's, so feel free to ask questions about them!

With regard to closing costs, every lender differs, but I can tell you that using your own RE attorney/title company is a smart thing to do because it affords you the opportunity to shop for the best fees, etc.

Also, when you compare lender programs, make sure that you are comparing the APR's and not the interest rates (just an honest opinion). I hope this helps, and please let me know if you need anything else information wise; I have done business with a significant number of invetsors.

[gregory]

Also, when you compare lender programs, make sure that you are comparing the APR's and not the interest rates (just an honest opinion).


I thought APR's and interest rates where the same thing. What is the difference?

[LOTrainer]

I thought APR's and interest rates where the same thing. What is the difference?

Interest rates are the rate at which your credit and loan package is valued. APR (Annual Percentage Rate) takes into consideration all fees associated with the lender/investor as well as the interest rate you have qualified for.

Hypothetically, if you have an interest rate of 6.5% and the lender charges 1% for origination, $450 for processing, and $600 for underwriting, it will approx. increase your APR to 6.875%+

Essentially the APR is exactly what the loan package is costing you as the client.

[Codythebest]

Or, avoid all and any fee by buying owner financing, subject to, or other terms...Or, flip the contract instead...

[boatboy]

andy thanks alot, you've been great help.

[newagentfinder]

Thanks, this is great info...better to learn here then the hard way by making a mistake!

[LOTrainer]

andy thanks alot, you've been great help.

That's absolutely not a problem. Please let me know if you need any more help or have anymore questions! My door/email/phone are always open!! Good luck!

[tefariss]

My first flip I used an investor. He was actually a friend of mine who had 100k equity line on his house and was a realtor. I used the 50k equity in my house did all the work and we split the profits. Deducted interest paid on taxes
My next flip I got a commercial loan for 12 months and paid just the interest. You just have to get creative and do your homework!

[thedeallocator]

"I have never got a mortgage before so i was wondering what should I look/ask for from the lender."

Make sure that you compare quotes from at least 3 lenders.
Make sure that they are talking about the same loan product so that you can compare apples with apples. You want to avoid loans with a prepayment penalty.