In my previous Blog I gave a few tips on how to buy houses in todays market:  one of the tips was not to buy with short term balloons.  As a result of that article, I was aked the following questions:

I have a dilemma that I need help with.  My son is in the Army.   They are
moving him from SC to Augusta, GA.  He presently has a house that  he bought and
did rehab on and will sell it. He presently has hand money on a  foreclosure
that he can get for $30000 in Augusta.  He has to close on it  in the next 2
weeks.  A lot of time was wasted because we thought we had a  loan from a bank
based on a house that we inherited from my dad.  I was  going to get a heloc
and lend my son the money.  I can't get the loan  because I don't live in the
house.  Now we are having difficulty getting a  loan at a reasonable rate and
without extra points as for a VA loan.  Some  want 20% down, some 10%.  The
house needs some work so that would leave my  son without money to do repairs.  
We both have credit scores in the  mid 700 and both have great incomes but
both have high credit balances because  of  houses and rentals that we have.  Is
there something that you  could suggest that we could do.  I was going to
borrow money for short term  until I read your article.  How do people keep buying
houses with no money  down and how do they buy houses out of the state in
which they live?

My answer:

several ideas:

1.  instead of a HELOC on the the house you inherited, can you qualify for a
full 30 year re-finance on it?  Do you own the house in your name, his name,
both, or in a company name.  All of these things will factor in if you can
re-fi or not.  You can re-fi as an investment property.  These are hard loans
to get now, but with your credit scores and solid income, it may work.  If you
do that, be sure you borrow at a percent of value that will still allow you to
sell the house or rent it and cover the payment, including taxes and insurance,
or you are creating another problem for yourself.  Even though I do not like to get bank loans, at least this way you would have a 30 year loan, not a 1 year balloon.

2.  Can your son qualify for a loan once the house in SC is sold?  If so, and
you have access to short term cash, it may not be bad, but he would have to
price the house in SC to move quick to pay everything off.  Once that is done,
and he owns the new house, it would be easier to get a re-fi, maybe an FHA loan
only needing 3% down.  When this happens he could pay you back your cash.

3.  Where was the short term cash coming from?  Some programs are better than
others.  In this market I just do not like short term notes, you never know
what may happen here.  Unless you can borrow a low LTV (50-60% max) and sell
the house cheap, and pay it off, but you would be giving away equity to do
this.

4.  Do you know anybody that has money sitting in a 401K, stocks, etc. that
could lend him the money for a higher rate of interest (8-10%).  The lender
would be the first position mortgage holder, be named on the fire insurance,
title insurance, etc. so they are safe.  That could get him into the house w/
no banks, no money down, and he can also borrow the money for repairs.  I would
borrow no more than 70-75% of the value of the home once fixed.  Your son may
even to borrow enough for closing costs, repairs, purchase, and have some extra
left over in his pocket (thins is how we get paid to buy houses the day we buy
them)!  Yes, he would be paying a higher rate of interest, but he would have
the house!   Then, once it was fixed, his house in SC was sold, he could re-fi
into a normal mortgage, or just keep the private lender on the loan and pay
that down.

5.  The last way we buy with no money down is through owner financing, but since
this is bank owned, this does not apply here.