Need input from the more credit savvy

[Anonymous]

I own a 3 family that I've spent quite a lot of money on this past year.  I basically remodeled the building and put on a new roof.  In order to complete this work, I had to max out my equity line and 2 credit cards.  Before I bought the house, my credit scores were 765-790.  Currently, my scores are (710-720).  I pay all of my bills on time and pay lots more than the minimum due.  I happened to find a one family for sale for under $100k.  It needs work, mainly a kitchen, paint and landscaping -- most of the work we can do ourselves.  It will rent for about $1500 a month.  I make enough money to get the mortgage especially adding the income from the 3 family but my debt and current scores have me a bit scared about actually getting approved.  I also, only have about $4k in available cash.  Do I try for a no money down mortgage and use the $4k to pay off one CC or pay down 2 CCs, or do I leave the debt as it is manageable and use the $4k as a down payment?

[LIGHTNIN]

 So you own a building that has 3 different units, that you rent to 3 different families right?

What are the credit limits and balances on the two credit cards?  Oh, and the interest rates also for each.

And equity line of credit.... is that tied to the building with 3 units? Whats the balance,interest rate and terms?

Are you flipping rental prop or fixing it up and renting the units out yourself ?

[ShanetheMortgageMan]

New rental property will require you put 20% down.

[Anonymous]

Yes, the 3 family is rented to 3 different families.   The regular interest rate is 23% on both Lowes and Home Depot.   My Lowes card balance is $1500, credit limit is $2000.  Of the $1500 balance, $1000 is interest free until Jan 2011.  Home Depot balance is $300, limit is $2000.  That balance is interest free until Dec 2010.  The equity (on the 3 family) is $25,000 with an available balance of under $1000, it's 5% with a 10 year draw, 10 year pay period. 

We fixed up the 3 family including updating the kitchens and baths, new plumbing, new roof, new carpets, new paint.  We still have some minor work to finish and plan on selling, within the next 2 years.  The one family we're looking at, I want to rent it out until we sell the 3 family, he wants to live there.  Neither of has won that argument, yet.  lol  If we rent it, it would only be for a year or two, until we sell the 3 fam.  Then, we would move in.  We would pay the mortgage off or down considerably so we could afford to live off of one pay and I would go back to school full time.  

Today's development:  The realtor claims the bank (Chase) is offering financing incentives.  I called Chase and talked to a loan officer.   The financing incentives are basically waving some fees.  As we talked more, I told him that the house needs a kitchen.  He said that even though his company owns the property, they wouldn't finance it because it doesn't have a kitchen.  He said they're probably looking for a cash buyer.   Are there other financing options?  Would the house qualify for a construction loan?  How does a construction loan work, there's very little info online.

[ShanetheMortgageMan]

Construction programs are typically limited to owner occupied properties at this time, due to the really high default rates on non-owner occupied construction loans in the past.

There was a period of time when construction loans used to lend on the higher of the "as is" value + cost of improvements or the "as completed" value, so if the home would appraise for high enough as completed you wouldn't have to bring in any money to build your home since there was enough equity after the fact.  However these days they have reverted back to the guidelines of old, and use the lower of those two figures, so the maximum loan amount is based on the (("as is" value + cost of rehab) - down payment requirement).