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In tough economic times like these, CASH IS KING!
And who said cash-out refinancing is dead?!
It's not. And we just proved it!
Eric and Tamara Todd wanted to take advantage of the great bargains in bank-owned properties and purchase a couple of investment properties to fix up and rent out.
The Todd's purchased their house many years ago and never withdrew any equity. So even in this depressed market, they still had a lot of equity.
The challenge, however, was the current mortgage market. Fannie Mae and Freddie Mac are drowning in red ink. They DO NOT want to buy loans where people have pulled-out their equity and the rates and points they charge are absolutely outrageous!
Thank Heavens for FHA! With FHA we were able to get them $126,000 in cash. That's $32,000 more than the maximum we could have gotten them with a conforming loan AND we saved them over $8,000 in points!
With all that cash they were able to pay-off about $20,000 in credit cards and installment loans, leaving them debt-free except for their home mortgage. And they had the $100,000 + to buy a couple fixer-uppers.
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