IRA Loans - Non-Recourse - Real Estate Investments Investing

INFORMATION ABOUT IRA LOANS

NON-RECOURSE

Regular home loans, FHA loans, Fannie Mae loans, purchase, renovation and refinance click here.

678-439-8683 click here to contact a non-recourse specialist *

Download this simple packet for transaction pre-approval

You may have heard about people using funds from their self-directed IRA and wondered how this is accomplished. Then when you think about it and realize they own several homes in their IRA you may think they must have had millions of dollars in their IRA to own so many homes. The truth is they very likely used our program of purchasing homes and holding them in their IRA by using IRA funds only for the down payment and financing the remainder of the purchase using our funds. This would essentially allow anyone with about $40,000 in their IRA to purchase a $100,000 investment property.

Frequently Answered Questions
1. What about risk to the IRA?
2. What if you are retired?
3. How many properties can I own?
4. Who can help me with a self-directed IRA?
5. How long does it take to get approved?
6. What are the min and max loan amounts?
7. What properties are ineligible?
8. Miscellaneous Information
9. What are the rates?
10. What are the closing costs?
11. What else should I know?
12. How can I get a Good Faith Estimate?


IRA LoansWhat about risk to the IRA?

Because these are non-recourse loans the only risk ever is your down payment. The nature of the non-recourse loan protects your IRA, and you personally, from ever being liable for any further obligation should you default on the property. In the event of a loan default the property would revert to ownership of the lender and your other assets would remain safe.

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IRA LoansWhat if you are retired?

Since this loan is based on the aspects of the property and the amount of funds in your self-directed IRA qualification is simple. We do not verify employment, income or other assets. Only the self-directed IRA is examined. We do require a credit check but only to look for liens which could encumber the IRA itself such as federal tax liens.

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IRA LoansHow many properties can I own?

There is no limit to the number of properties you own. As long as you are a legal resident of the United States and have an active self-directed IRA account you can own as many properties as you have funds available.

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IRA LoansWho can help me with a self-directed IRA?

There are literally dozens of great national providers. Your national bank is not generally included in the list as many of their so-called "self-directed" accounts are only self-directed if you are purchasing bank assets with your funds. They will, in fact, tell you what we offer cannot be done. Here is a list of companies familiar with the services we offer.

IRA LoansHow long does it take to get approved?

The most important factor is the property itself. Simply complete the property evaluation form and within about 1 business day you will hear back from us if we are interested in the transaction. At that time you will submit documentation about your IRA and a full application for the loan. Closing from that point requires about 45 days if you do not already have your self-directed IRA in place and about 30 days if that has already been handled.

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IRA LoansWhat are the min and max loan amounts?

For all loans the minimum loan amount is $50,000. Since we offer single family to multi-family financing to your self-directed IRA the maximum loan amounts are variable and the are also variable by market. Generally speaking the maximum loan amount for a single-family property is $175,000.

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IRA LoansWhat properties are ineligible?

Residential with large acreage, raw land, speculative purchases, farms, manufactured or log homes, non-warrantable condos, Timeshares, Condo-hotels, Co-ops, hotels, senior or assisted living facilities, non-franchise restaurants, entertainment properties, mini-storage, and commercial property. Condominiums: Condo's must meet the following minimum criteria to be considered Warrantable. The project must be 100% complete, including common areas. The units within the building must be 60% sold and 33% of all building units must be owner occupied or 2nd homes (versus tenant occupied). Condo's not meeting these criteria are not eligible under our non-recourse program.

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IRA LoansMiscellaneous Information

IRA/ SEP assets must be managed by a custodian in a self directed IRA/ SEP. Larger down payments may be required depending on the property debt service coverage or other variables.

NASB reserves the right on an exception basis to provide an approval and pricing for loans that do not fall within the set terms of this matrix. In situations where NASB considers a loan whose characteristics fall outside the guides of the current matrix, the approval and pricing will be made on a case by case basis only. In most cases pricing will be worse than the current pricing, but may be better in some isolated cases. The loan decision will be made by the Shelf Committee according to NASB's standard Exception Policy. The loans will typically be a purchase with a significant down payment.

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IRA LoansWhat are the rates?

Rates are steady on this type of loan but they do change from time to time. Generally speaking they start in the mid six percent range. They are not subject to loan level pricing adjustment like your standard home loan so you either qualify or you do not. Either way the rates are still much lower than you would expect considering there is no recourse and the loans are made on high risk investment properties.

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IRA LoansWhat are the closing costs?

As with anything where costs are based on a percentage and fixed the costs for smaller loan amounts are higher than larger loan amounts. The good news is going through us instead of directly to NASB you will not pay an origination fee to NASB.

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IRA LoansWhat else should I know?
  • The property MUST be income producing since it is the property itself responsible for the monthly payment.
  • Rehab, renovation and construction loans are not available with this program.
  • All funds MUST come from the IRA used to purchase the home. (In other words your down payment and other associated costs).
  • There is a 3 year 1% pre-payment penalty if you pay the origination fee out of pocket. Without the origination fee there is an additional rate fee and a 3 year 2% pre-payment penalty.

Lender Related Fees

$310 processing fee
$385 underwriting fee
$510 appraisal fee (may be more depending on state)
$16 flood cert fee
$10 fraud detection
$200 attorney fee
$25 social security verification fee

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IRA LoansHow can I get a Good Faith Estimate?

Complete the no obligation transaction evaluation form you can download and submit to me. Once we get a property decision I will send you the estimate of closing costs along with 2 scenarios for each loan solution with the Fixed and the Balloon.

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  1-4 Units
Product / Rate 5/1 ARM Prepay Penalty
6.750% +2% origination fee 1% for 3 yrs
6.875% + 1%origination fee 2% for 3 yrs
 
25 YEAR FIXED Prepay Penalty
7.500% 1% for 3 yrs
7.625% 2% for 3 yrs
 
Max LTV Purchase- SFR 65% (65-70% is exception)
Max LTV Purchase- 2+ units 60%
Max LTV Purchase- Condos 50% (50-60% is exception). No AZ, MI, or NV. 
Max LTV C/O Refi Up to 65% of the original purchase or current value, whichever is less. If the value has declined or the property is located in a market where values are in decline, the LTV will be determined upon review of the appraisal.
Max LTV C/O Refi -Condos 50% of Purchase Price for Condos. No AZ, MI, or NV.
Max LTV for AZ, CA, and FL 50% max LTV for AZ, CA, & FL.  MI & NV are ineligible
Max Term 25 yr SFR/Condo or 20 yr 2+ units
Minimum DSCR SFR 1.25X
Minimum DSCR 2-4 Units 1.25X 
Minimum DSCR Condo 1.40X
Max Loan Amount $175,000 (>$175,000 is exception)
Transaction Type NOO Purchase

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* I am neither an investment counselor nor advisor. I am an independent broker of these services and compensated directly by you and/or the bank which funds the deals - all of my fees are fully disclosed from the beginning. Check with your tax and retirement planning specialists who have probably heard of this program offered by North American Savings Bank (NASB). You especially want to check with a tax professional about the possibility of resulting Unrelated Business Income Taxes (UBIT) to your IRA.