topic Re: Buying a house with credit cards in Credit Cards

Buying a house with credit cards

Gunnar419 — Sat, 20 Apr 2013 22:30:37 GMT

I may have the opportunity to buy a dirt cheap fixer house. I mean DIRT cheap, foreclosed, abandoned, but no possibility of a mortgage.

My question is I'm considering buying this mostly on credit cards and I want to know HOW you do that.

I know the possible drawbacks of fixer houses and using credit cards for house buying, so I don't need warnings about hidden costs, high interest rates, or running up my utilization. I've already warned myself about all that. What maybe some experienced people can tell me is HOW you use a credit card to buy a house.

The real estate agent tells me you can only do it by taking cash advances on the cards and I know that can create problems, but I'm wondering if there's any way to treat it like a regular purchse. Or if it does have to be cash, is there any way to tell the cccs in advance what I'm doing so they don't think I'm just being crazy suddenly taking thousands in cash advances.

Re: Buying a house with credit cards

HiLine — Sat, 20 Apr 2013 22:37:52 GMT

Interesting idea. Normally I would say that if the real estate agent codes the transaction as cash advance there would be no way around it. But I honestly don't have any experience with this type of transaction, so I'm just going to sit tight and listen.

Re: Buying a house with credit cards

sarkell — Sat, 20 Apr 2013 22:41:23 GMT

Do you have a relationship with a bank maybe a personal loan. Just a thought.

Re: Buying a house with credit cards

webhopper — Sat, 20 Apr 2013 22:45:26 GMT

Its probably easier to buy a house on a personal Line of Credit than it is to buy a house on a credit card. Many Credit Unions offer the Personal LOC.

I opened up one with Navy Fed in Sept, to pay my contractor for a large remodel project and avoid swipe fees.

You can use wepay.com or similar services to purchase the house.. .but you'll get into having swipe fees.

A LOC is a revolving account, so as soon as it is paid off, then the funds will be available to use again, unlike a personal loan.

Wells Fargo, US Bank, and many other places offer these. You can even secure the Line with personal assets.

Eventually I want to have a secured LOC for my business so that I'm not putting these things on my personal LOC.

Re: Buying a house with credit cards

Gunnar419 — Sat, 20 Apr 2013 22:44:58 GMT

Thanks for the response, HiLine. The real estate agent wouldn't be coding the transaction at all. Payment would be made to a title company and to the best of my understanding, title companies don't take credit cards at all. The bank that holds the property will choose the title company, so I can't even ask about it with local title companies I've used before.

I'm wondering whether a company like williampaid might be able to handle it, but I'm hoping somebody who has bought a house or land on credit cards will know for sure.

Re: Buying a house with credit cards

webhopper — Sat, 20 Apr 2013 22:46:33 GMT

You can also do a "Balance Transfer" and list your checking account # as the account to be transferred to, and then the cash will go to your bank account. BT fees will apply

Re: Buying a house with credit cards

Gunnar419 — Sat, 20 Apr 2013 22:50:31 GMT

Thank you, sarkell and webhopper. I do have a small account at a local bank, but my income is low and I don't know that any banker or credit union officer would extend me either a personal loan or an LOC even though I have good credit. I do have other people I could possibly borrow from, but it would mean asking favors or asking them to invest in a friend, something I'm reluctant to do.

Credit cards aren't the ideal choice, I know, but they do seem to be a no hassle possibility, which is why I'm looking into this method.

Re: Buying a house with credit cards

Gunnar419 — Sat, 20 Apr 2013 22:51:29 GMT

@webhopper wrote:
You can also do a "Balance Transfer" and list your checking account # as the account to be transferred to, and then the cash will go to your bank account. BT fees will apply

Really good thought, there! I remember somebody talking about that on the forums not long ago. I should look into that, definitely!

Re: Buying a house with credit cards

NonSufficientFunds — Sat, 20 Apr 2013 22:54:08 GMT

Back in the 1980s, there were some late-night infomercials explaining how this could be done.

The basic idea was to approach the seller and ask them what they would consider accepting instead of cash.

If they wanted furniture, appliances, tools, etc., for their new house, you could purchase the stuff with credit and offer it in exchange for an interest in the property. If you had the credit to finance a boat, car, camper, or something else the seller wanted, you might be able do do some wheeling & dealing to make the deal work.

I don't know if anyone was ever successful at pulling it off (besides the paid shills on the infomercials), and I don't see such schemes being peddled anymore.

It sounds like a super-risky venture.

Besides having to service all that high-interest debt, any house that is super-cheap, probably needs major work, and is likely in a depressed area, which means it will also be very hard to sell in a short enough time to make it worth the destruction of your credit.

Re: Buying a house with credit cards

Cali_Credit — Sat, 20 Apr 2013 23:03:48 GMT

DCU offers the same rate for purchases, balance transfers ect, just have to login online and transfer with one click from any credit cards or lines of credit. Just fYI this sounds risky paying with multiple credit cards and the creditors may soft pull and lower limits and close out your cards.

Re: Buying a house with credit cards

NonSufficientFunds — Sat, 20 Apr 2013 23:06:39 GMT

If the house is really cheap, and you don't want do deal with a mortgage, you might consider seeking a loan from P2P lending organizations, like "Prosper" and "Lending Club" - interest rates are similar to credit cards, but the terms would be much more managable, and they would front the cash.

Re: Buying a house with credit cards

Anonymous — Sun, 21 Apr 2013 00:48:56 GMT

Depending on which credit cards you have, Balance Transfer checks can be used for just about anything - assuming the company you're paying takes a check.

Of course beware, balance transfer checks have their own terms and unique fees in many cases, although I often get 0% APR balance checks for one of my BofA cards.

Re: Buying a house with credit cards

Revelate — Sun, 21 Apr 2013 02:01:05 GMT

AFAIK most purchases of this type typically require cash more likely cash equivalent (cashiers check)

Other than the idea of writing balance checks to yourself, there's likely very limited methods for doing this using your credit card.

Typically all of these either at auction or direct purchase tend to go this route to my knowledge. Was looking at this recently out in my neck of the woods, but I'd have to beggar myself to come up with the amount of cash required. I can hit 20% on a nice property without digging into retirement funds, but full cash on what goes for fixer upper prices ugh.

Some sort of alternate financing is likely the way to go, Prosper or other personal loan. Mortages won't be underwritten on this sort of sale to my knowledge.

Re: Buying a house with credit cards

webhopper — Sun, 21 Apr 2013 02:07:29 GMT

@Revelate wrote:
AFAIK most purchases of this type typically require cash more likely cash equivalent (cashiers check)

Other than the idea of writing balance checks to yourself, there's likely very limited methods for doing this using your credit card.

Typically all of these either at auction or direct purchase tend to go this route to my knowledge. Was looking at this recently out in my neck of the woods, but I'd have to beggar myself to come up with the amount of cash required. I can hit 20% on a nice property without digging into retirement funds, but full cash on what goes for fixer upper prices ugh.

Some sort of alternate financing is likely the way to go, Prosper or other personal loan. Mortages won't be underwritten on this sort of sale to my knowledge.

You are correct! Lenders require appraisals.

One option would be to get a 203k (otherwise known as a construction) mortgage... Its basically a mortgage for fixer uppers. Once the place is fixed up, then the mortgage can be refinanced into a normal mortgage once the repairs are made. Only certain repairs can be made using this type of mortgage, and you have to have estimates for all of the work you want to do before hand.

In this way, you borrow both enough to buy the house, plus enough to make the needed repairs

Re: Buying a house with credit cards

Revelate — Sun, 21 Apr 2013 02:15:08 GMT

Thanks Webby! I didn't know those even existed.

I was looking at it from a policy angle, and I may be mistaken in my post thinking about it. I need to research it more, just that foreclosed/REO properties around here are still unaffordable sans mortgage that I stopped looking at the first hurdle but that may only apply to auctions here. Not sure

Re: Buying a house with credit cards

webhopper — Sun, 21 Apr 2013 02:19:28 GMT

Rev, if you're serious about the investor route, take a look at http://www.homepath.com/

Fannie Mae REOs can be bought using a homepath mortgage. Listings on the fannie mae site are eligible for investor Homepath Mortgages after the initial 15 day "First Look" period.

HomePath Renovation Mortgage allows a buyer to purchase a property that requires light to moderate renovation. The one loan amount includes both the funds for the purchase and renovation — up to 35% of the as completed value, no more than $35,000. Available for owner occupants and investors. Go here for the investor page at fanniemae.

I don't want to go too deep into this topic, since it would be disrespectful to the OP's original question...

But there are alternative financing options out there besides using a Credit Card or personal loan.

Re: Buying a house with credit cards

NonSufficientFunds — Sun, 21 Apr 2013 02:36:03 GMT

Another source of funds available for the purpose of flipping property is called a "hard-money lender".

Cash is made available very quickly, and the lenders don't take much interest in the personal credit worthiness of the borrower.

The interest rates are higher than at a bank, but since the loan is usually paid back quickly (upon the sale of the renovated house), it is a very attractive option for those who want to get into the house-flipping business with very little cash.

However, the hard-money loans are only for flipping purposes - not for long-term occupancy by the borrower, as they typically require rapid repayment.

http://en.wikipedia.org/wiki/Hard_money_lender

Re: Buying a house with credit cards

Gunnar419 — Sun, 21 Apr 2013 02:37:42 GMT

Thank you all for the good, thoughtful discussion. I'm learning a lot.

I definitely don't want to do anything that's not ethical or anything that would bring AA on me from cccs. The balance transfer idea is interesting and I will look into DCU, though I'm supposed to be gardening now and would like to avoid any new CLs or LOCs. At the moment, I don't think I could show a financial institution enough income to justify new credit anyway.

The thing is about this house that when I say DIRT cheap I really mean it. Four digit price, and though it's definitely a handyman special it's in a nice area on a large lot. It's bank owned, so I don't have flexibility for making deals with the seller, but it's an amazing deal as is. Thanks again for all the suggestions.

Re: Buying a house with credit cards

webhopper — Sun, 21 Apr 2013 02:39:33 GMT

@Gunnar419 wrote:
Thank you all for the good, thoughtful discussion. I'm learning a lot.

I definitely don't want to do anything that's not ethical or anything that would bring AA on me from cccs. The balance transfer idea is interesting and I will look into DCU, though I'm supposed to be gardening now and would like to avoid any new CLs or LOCs. At the moment, I don't think I could show a financial institution enough income to justify new credit anyway.

The thing is about this house that when I say DIRT cheap I really mean it. Four digit price, and though it's definitely a handyman special it's in a nice area on a large lot. It's bank owned, so I don't have flexibility for making deals with the seller, but it's an amazing deal as is. Thanks again for all the suggestions.

If you have a retirement account, 401k, or certain insurance policies that have face value, you can also look at taking a loan against one of them

Re: Buying a house with credit cards

Anonymous — Sun, 21 Apr 2013 12:08:50 GMT

My husband and I are doing the same thing.

We used our LOC/Navchek and we also used our paypal smart connect accounts. Just sent each other payments and transfered to our accounts.

We know the interest is high but it is worth it to us.

We got a 2000 sqft poured block house 3b 2b for for $6000.

We took extra cash to fix the dry wall, windows, plumbing, and new doors, and locks.

The Hvac was gone so we just bought us some window units for now.

We made it livable so now we will either rent it out or move into it.

Either way we can pay back quick and will be so much cheaper that a mortage that ends up costing 3x's as much as the original price of the house.

Good luck to you!