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Company Loan Type APR Est. Pmt.

Are there reasonable mortgage terms for amounts under 50,000?

Posted on: 19th Feb, 2009 09:41 am
I am a first time home buyer, and have been looking for a small house near Downtown Indianapolis. There are many forclosures in these areas and we found a cute little bungalow in good condition for 30,000. We have very good credit and have been looking for a loan. Everyone has told us that we will have to have a 6.5-7% rate because the house is so inexpensive. We have 6,000 to put down, but have been told that we will have to have 9000 to cover 20% down and closing costs. That makes closing costs 10% of the home value! It seems ridiculous to me, but I'm totally new at this. Are there reasonable mortgages for this cheap of house?
There is no such thing as "reasonable mortgage terms." I'm looking at refinancing. I am 10 years into a 30 year fixed rate 7% loan. I owe 100K. The fees to do so total 8,000 dollars!

Maybe you can get an unsecured personal loan. Your amount is similar to a car loan. Maybe you could save some fees that way?
Posted on: 19th Feb, 2009 05:27 pm
To answer the first post, yes rates are a bit higher for small loan amounts. Essentially, the paperwork is the same for the bank regardless as to how many zeros are at the end of your loan amount. So, the bank needs to make enough money to fund their time in processing your loan.

To answer the second question...
You should not have $8k in fees. The only thing that could push your total out of pocket expenses at closing to the $8k level would be your escrows and pre-paid items. If that is not the case, then I suggest you contact one of the loan officers here on this forum for a second opinion.
Posted on: 19th Feb, 2009 05:44 pm
i'm looking at my rate sheet from yesterday afternoon, and i see an adjustment of .375 for a loan of less than $50000. what that means is this: if you borrowed $100000, a typical rate might be 5.5% with (let's say) 2 points. with this adjustment, you could still get the 5.5% rate, but the points would be 2.375 instead of 2. i don't think that's an abhorrent adjustment, frankly, and certainly not a sufficiently high percentage that it would cost a lot of money. this scenario is for a conventional loan, assuming excellent credit.

now for an fha loan, my example is like this: a rate of 5.5% with (let's say, again) 2 points, for a loan amount of $100000. for your loan, which is less then $50000, the adjustment is .625. i will say, again, that .625% of $24000 (your loan amount) isn't much in dollars ($150). with an fha loan, you do not need excellent credit to get the optimum pricing, as you would with a conventional loan.

so...for the original poster...you're being quoted abnormally high rates, in my opinion. you should not be drastically penalized for borrowing a reduced amount. yes, there is a slight adjustment, but the dollars involved are not particularly high.

for poster #2, with the $8000 in costs...i am in agreement with eric that the number seems to be excessive.
Posted on: 20th Feb, 2009 08:02 am
I will move my comments to another thread, as to not hijack the OP...
Posted on: 20th Feb, 2009 12:08 pm
gmakerly,
Looking at your explaination for FHA loans, is the requirement still 3% down?? So if the original poster wanted to keep money in their pocket they could put down $900??
Posted on: 15th Jul, 2009 08:44 am
it's now 3.5% required for down payment; $1050. closing costs are always going to be somewhat high in comparison with the purchase price - but that's including legal fees and certain fixed costs that are simply part of the process, regardless of the price or value of the property. a slightly higher rate makes it look like there are fewer costs, but then again they would be financed in that case, thereby resulting in higher costs over the long-term.
Posted on: 15th Jul, 2009 09:12 am
I have five homes with the potential value of 120,000 dollars. However, I only want 60,000 dollars loan against the 100 percent equity of the homes.
Posted on: 10th Nov, 2009 07:33 pm
corey, was there a question there? are you seeking a lender to deal with on these properties?
Posted on: 11th Nov, 2009 01:46 pm
Gmakerley:

"..if you borrowed $100000, a typical rate might be 5.5% with (let's say) 2 points. with this adjustment, you could still get the 5.5% rate, but the points would be 2.375 instead of 2..."

not to derail this topic, but what do you mean by 2 "points" - I'm unfamiliar with this term, does it have to do with the amount of deposit required or something?
Posted on: 11th Nov, 2009 05:16 pm
"point" aka "origination fee" and "discount fee" is equivalent to one per cent of the amount of the loan, and is typically a fee payable at closing.

rise, from your other posts i would have thought you'd had experience in that area. your question kinda surprised me.
Posted on: 13th Nov, 2009 09:54 am
My mortgage broker told me that FHA is not giving mortgages on condo for under $50,000,.00. Do you know anything about that. We found a condo in Florida but can't get a mortgage for $30,000.
Posted on: 19th May, 2010 04:48 pm
I do not have specific information about FHA loans but normally, lenders are not ready to give a loan of a smaller amount like $50,000. In such cases, the borrowers may contact retailers who give personal property loans and try to get a mortgage from them. However, such loans are available at a higher interest rate.
Posted on: 20th May, 2010 02:24 am
Elizabeth, I'm not conversant with "personal property loans" as they relate to the purchase of a home, but I'm in agreement that you'll have a miserable time trying to find a conventional or fha lender to provide you such a small loan. The costs involved in origination of a loan like that are prohibitively high for a lender (and you, as a result). You may find, however, private lenders who'll be willing to undertake such a loan. By that I mean, private individuals who are known to make mortgages, or companies outside the normal chain of those doing conventionals/fha loans.

Keep trying...keep calling the little banks and credit unions in your area, and also use your yellow pages to find private lenders...do an internet search, too.
Posted on: 24th May, 2010 09:55 am
buying my mothers home back from the state that has a lein and have their approval to purchase at $28K, have excellent credit and savings to cover this, but want to find a lender
Posted on: 24th Jun, 2010 01:02 pm
Hi Barb!

Welcome to forums!

You can contact the local lenders and apply for loans. If you meet all the required criteria of the lender, then you would get approved for it. You can even speak to the lenders of this community and seek a no obligation free mortgage quote. This will let you know what type of rates and terms you would get.

Feel free to ask if you've further queries.

Sussane
Posted on: 25th Jun, 2010 12:40 am
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