Buyers close on distressed New Haven foreclosure in two weeks

Mortgage lender: James Forte Property type: Single-family home in New Haven

Purchase price: $80,000 Borrowing amount: $117,000 Loan type: Fixed 1-year

Rate: 7.49 percent Background: The borrowers were a health coach and pharmaceutical sales people whose passion was for flipping houses. They had very good combined income and were very strong borrowers on paper with good credit, job history, assets and debt ratio.

But sometimes no matter how good you are, it’s simply not enough. In this particular case, the buyers were in a situation that they wanted to buy, renovate and flip foreclosures or distressed properties.

The rule of thumb is that cash is king when purchasing properties like this because a traditional mortgage won’t lend on a property that is not functional. A renovation loan mortgage usually takes more than 30 days and foreclosures typically need to close in under 30 days.

The other alternative people use is hard money, which is beyond expensive. This is where Forte saves the day.

The borrowers were existing clients of Forte, who has a passion for flipping houses. He gave them a heads up early on a new line of credit program he was offering, which was created for the intention of flipping houses.

He got them set up and approved for the line in a very short time, so they would be ready when they found an opportunity. The first opportunity came up and he had them closed in less than two weeks from the day they bank accepted their offer.

The property was distressed and in need of of work. The buyers knew they could buy the home for $80,000, put $30,000 into it and sell it for $170,000$180,000 based on comparable sales.

The borrowers closed on the deal, putting only 10 percent of their own money into the deal for both the purchase price and the total renovation costs.

The great part about this line for these clients is that they can buy five or six properties at a time and really make money as opposed to using their own capital to flip one house and have that stress on their shoulders.

This was a very happy ending as the buyers were able to take advantage of this diamond in the rough.

James Forte, Total Mortgage, (203) 942-6860, jforte@totalmortgage.com