Flipping? Financing? Here are few things you need to know…

Here in the Phoenix real estate market we have seen investors come back into the market in droves over the past year or so.  Some are the traditional long term, buy and hold investors and others are the flippers.

This post is dedicated to the flippers.

Below are some financing guidelines/restrictions on flipping homes provided to us by Rob Malone at Phoenix Mortgage Advisors: (Not all of these apply for every lender. Consult your lender to verify)

Conventional Mortgages

– Maximum loan to value is 80%;

– Most likely the transaction will require a higher level of underwriting so allow a longer escrow period;

– If the increase between the seller’s purchase prica and the buyers new price is equal to or greater than 15%,2 full appraisals will be required, both paid for by the buyer.  If one value is lower than the sales price, the lower of the 2 values must be used;

– If the increase is less than 15%, one full appraisal and a CCR or exterior appraisal must be ordered;

– The property must be exposed to the open market (listed on the MLS or public auction);

– Buyer and Seller may not be represented by the same Realtor/Broker;

– Any reference to “assignment of a contract sale” is ineligible;

– No re-dating of the purchase contract is allowed;

– The Seller must be in title to the subject property (Public records must show Seller listed on sales contract is in title);

– Simultaneous closings are prohibited;

– No assignment of contract is allowed;

– No more than 1 title transfer in last 12 months (other than financial institution or government entity. Asset managers hired by lenders do not count as transfer);

– If the seller is an LLC, Corporation or Trust they must be fully documented and a copy of the operating agreement or other legal documentaion reflecting membership of the LLC/Corp/Trust must be provided by seller and reviewed by lender to ensure borrower is not affiliated with entity;

– Must be an “Arms Length” transaction;

– If the propert was acquired by the seller at below market value as a result of a distressed sale and there are no significant imporvements made to the property to account for a higher re-sale price, the seller must be able to clearly show the difference in price is due to market conditions

Stay tuned for FHA Mortgages

For more information on Anthem, Phoenix, and Scottsdale real estate go to www.ArizonaPremiereLiving.com

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