Financing a Local Business

[kenwin30]

hey guys, i just purchased a local dentistry for 250k, i paid half up front, and i owner financed the other 125k ! i borrowed $ from the bank for the up front $ using equity in my house for the loan.
i now have decided to go through another local bank to borrow the remaining $ to pay the original owner the rest of the money owed ! Here's my question, can i borrow $ on my house at another local bank, or is it just allowed only once ? thanks

 

[eljefino]

How much equity do you have in your house?

 

[ArrestMeRedZ]

If you already have a first mortgage on the house, and the money you just took out is a home equity loan, you probably won't be able to take out another home equity loan at a reasonable interest rate as that loan would be in third position behind the other two. Banks tend to not like that.

It all boils down to how much equity you have left in the house after all the loans you have on it are considered, your credit, and your ability to pay. If there is enough equity in the house, and you otherwise qualify, it might be better to refinance.

I've had a third mortgage on a house I bought once, but it was from an assumable first and second from the bank, and the seller took back a small third. It was when interest rates were skyrocketing, and I didn't want to refinance the first and second.

 

[Wolf359]

It all boils down to LTV and how willing the banks are to be 3rd or 4th lien holders. LTV is loan to value. If the total loans are say up to 70% LTV (you've borrowed 70% of the value of the your home), they will normally allow you to go up to 80-95% of LTV depending on the bank so you could get another one up to the max LTV if you could find a bank willing to do it.

 

[AZjeff]

So 100% of your business loan will be in home equity? All in.

 

[daves87rs]

Sure you want to do that?

 

[kenwin30]

do i have to tell the bank i already have a loan against the house ?

 

[Brybo86]

Yes you have to tell them and what are the terms of the owner financing?
Buying The business with zero actual money down?
Are you a dentist yourself?
Are you sure this is, WAS a good idea?

 

[Andrew1972]

You can only borrow against the equity in your home - any leans against it.

So your home equity - $125k(loan/lean) is around what the bank will loan. It likely less. You can always borrow more money from anywhere you just don't get the decent interest rates with unsecured loans.

 

[Andrew1972]

Originally Posted by kenwin30
do i have to tell the bank i already have a loan against the house ?


I am pretty sure it will get uncovered during underwriting process and you maybe committing bank fraud. They don't catch now they will eventually where they can demand payment of loan which if you cannot pay offer an unsecured loan to you at likely excessive rates.

 

[Donald]

What are the terms for the half the prior dentist financed?

How about a SBA loan?

You may be forced to refinance all your home mortgages into one to pull additional money from your house assuming you have equity after the 1st and 2nd mortgage.

Use the shady banks that other shady people in NY real estate use.

 

[oilpsi2high]

Originally Posted by kenwin30
hey guys, i just purchased a local dentistry for 250k, i paid half up front, and i owner financed the other 125k ! i borrowed $ from the bank for the up front $ using equity in my house for the loan.
i now have decided to go through another local bank to borrow the remaining $ to pay the original owner the rest of the money owed ! Here's my question, can i borrow $ on my house at another local bank, or is it just allowed only once ? thanks


So you didn't pay anything up front, really.

You can borrow whatever the bank will finance you for. And you must disclose the HELOC for the down payment in your mortgage application. Leaving out this "minor detail" would constitute fraud and land you in jail. Not a great way to start your practice.

These loans are all a terrible idea, by the way. Hope it all works out for you.

Are you a dentist?

 

[28oz]

Dang. Don't think I would have done this......by any loan route. I have two childhood friends who are now dentists, a brother in law who is a dentist, and another brother in law who owns his own dental lab. I keep hearing the same story. Dentists "can" do well, but profits are razor thin and getting worse. Many dentists (and even labs) are having a LOT of work done in China and having it shipped back to the states for final polishing, shaping, and fitting. Only way they can currently turn any profit. Dental insurance companies are a nightmare to deal with as well, so I'm told.

I REALLY hope it works for you though. Takes moxy to buy into a business like that. Not excited by the methods you chose, but I hope it works out!