Board Topic: 12-MTA Loan
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12-MTA Loan

Posted by: sky Nov 9 2004, 03:34 AM

I am trying to purchase some property in California. It is on 5 acres with 2 houses. I’ve been advised by a couple of loan consultants that this may be a hard piece of property to get a loan on because it has 2 homes on one parcel. I would plan to live in one of the houses and rent the other one out.

I own another house in Redlands, Ca with a very low amount to pay off (20,000). Value of Redlands home is 350,000 I was advised to refinance my home in Redlands with an 12-MTA loan and pay cash for the 5 acre property. (170,000).

The owner is willing to carry paper at 6% for an extra 10,000 with balloon payment in 5 years which could be another option.

I need advice if refinancing would be a wise move. I was looking forward to getting my Redlands home free and clear but I don’t see any other way to get a loan. I have excellent credit but I’m self employed and would need a low doc loan for a new loan.

Thanks in Advance,

Posted by: loanuniverse Nov 9 2004, 02:44 PM

I am of the idea to always use the cheapest source of money available. In your case, this might very well be refinancing your current residence.

The one thing that I did not like about your post was that you did not mention if you have approached a lender about financing the new property…

What the heck is a “loan consultant” anyway?

Talk to a lender or two about financing the purchase and see what they can come up with. Then, talk to a lender or two about refinancing the existing home and see what they come up with.

Next step, compare the options.

Giving a lien on your existing house when you are so close to paying it off does make one think twice, but either way you will still owe the money and it will be secured by tangible property.

Posted by: Guest Nov 12 2004, 03:44 PM
Thanks for your help,

I talked to a lender (Wash Mutual) and he thought I would have a hard time getting a new loan on the 5 acre property. I also contacted a few lenders from Lending Tree and 2 of them said because the property had 2 homes it would be next to impossible to get a loan on.

I am self employed and would need a low doc loan but I have excellent credit.

Do you think the 12-MTA loan would be a good option? I would refinance my current home for 200,000 pay off the current 20,000 loan and pay 170,000 cash for the 5 acre property.

One drawback to refinancing is the bank requires flood insurance on the home in Redlands which would be about 1200 per year additional cost. There is flooding in areas of Southern Cal but I am not in one of them.


Posted by: loanuniverse Nov 12 2004, 08:56 PM
I am not a fan of variable rate mortgages. I don't know if rates are going to go up or down, but everything seems to indicate a rise. In a couple of years, you could end up paying the cap. Then again, if it is not possible to qualify for a regular fixed product, and you really want to do this then you might have to take it.

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