The Company’s fix and flip loan is designed to facilitate the acquisition and improvement of a residential investment property. Merchants can underwrite and close this type of loan in 5-7 Days if needed. Subject to borrower and property qualifications, Merchants will lend up to 90% of the purchase price of the property plus 90% of the repair budget (90% of Cost, 90% LTC). All loans are subject to a maximum 75% Loan to Value (75% of Value, 75% LTV) based on the estimated As Repaired Value. For Pricing and Terms, scroll down.
Depending on the specific loan request and the borrower and property qualifications, loans may be offered at reduced LTC/LTV ratios. Each loan request is subject to underwriting and approval and factors considered include, but are not limited to, the strength of the property as well as the borrower’s credit, liquidity, net worth, income, and experience.
An example is shown below. The down payment requirement is subject to underwriting and may be lower or higher than in the example shown below.
Example at 90% of Purchase Price Plus 90% of Fix-up:
|Total Cost||Loan (90%)||Equity (10%)|
|Purchase Price =||$250,000||$225,000||$25,000|
|Improvement Budget =||$50,000||$ 45,000||$ 5,000|
|Loan Amount =||$270,000|
|Borrower Down Payment =||$30,000*|
|Minimum Appraised Value (75% LTV) =||$360,000|
* Down payment from Borrower may come from a variety of sources (subject to Underwriting and Qualification) such as: Cross-Collateralization; Down Payment Reserve Account: Home Equity Lines; Partner Funds; Gifted Funds. See our Benefits and Terms links.
If the borrower already owns other real estate, such as a primary residence, second home, or investment property, in an area that MMTC lends, there may be enough equity (at a proper loan-to-value percentage) in that property to use as the down payment for the new fix-and-flip property being purchased. So, the borrower may be able to put that equity to use and not have to put any cash in to the transaction. Many of our clients have successfully used cross-collateralization. Ask your loan specialist for details.
100% Financing Using Down Payment Reserve:
MMTC offers an innovative way to assist fix-and-hold real estate investors with their desire to build rental portfolios with little to no cash out of pocket after the refinance is obtained. MMTC will typically require 10 to 20 percent of the purchase price plus repair amount at the time of property purchase and loan closing; however, if desired by the Borrower MMTC will hold the down payment in a “Down Payment Reserve Account” and will make the loan for 100% of the costs of the project. When the loan is paid off, the Down Payment Reserve Account is refunded to the Borrower. The benefit to the Borrower is that when they refinance the loan it will be possible to refinance for an amount equal to 100% of the costs without seeking a “cash out” refinance to recover their equity. The down payment reserve account is fully documented for the borrower via a security agreement and is shown as a line item on the HUD closing settlement statement. In the above example, the loan amount would be for $300,000 and the “Down Payment Reserve Account” would be $30,000 which would be held by MMTC until the loan is paid in full, and then refunded to the Borrower. It is recommended that someone wanting to use a Down Payment Reserve get preapproved, before he has a contract on a property, not only with MMTC, but with the conventional takeout lender as well. MMTC can refer you, if needed, to such takeout lenders for your consideration.