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Deciding Between Hard Money Loan and Conventional Loan: Need Guidance
I found a good deal that I really like for $160K, which has excellent cash flow potential. Initially, I was planning for a quick sale and contacted my private money lender for a hard money loan. My plan was to put down 35% while she would cover the remaining 65%.
However, the seller has requested to be in escrow for 45-60 days so that he can complete a 1031 exchange and use the proceeds to buy another house within that period. Given this new information, I'm considering whether it might make more sense to opt for a conventional loan instead of a hard money loan, due to the lower interest rates associated with conventional loans. Alternatively, I could stick with the hard money loan and refinance into a conventional loan later.
I would appreciate any suggestions or advice on this decision.
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If you can get the conventional loan, go for it! It will save you a couple thousand dollars in financing costs. No reason to do this hard money loan if you have a lot of time. Save yourself from the HM rate and points plus the cost of refinancing later.
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@Emmanuel Ola
If you can get a longer term conventional loan I would choose that over a hard money loan every time - this is of course assuming the hard money loan has higher interest rate as well as a shorter maturity date
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Quote from @Ray Hage:
If you can get the conventional loan, go for it! It will save you a couple thousand dollars in financing costs. No reason to do this hard money loan if you have a lot of time. Save yourself from the HM rate and points plus the cost of refinancing later.
Thanks so much for responding. Will tell my agent that I will be switching to conventional.
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Quote from @Chris Seveney:
@Emmanuel Ola
If you can get a longer term conventional loan I would choose that over a hard money loan every time - this is of course assuming the hard money loan has higher interest rate as well as a shorter maturity date
Thanks so much for responding. Will tell my agent that I will be switching to conventional.
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Quote from @Emmanuel Ola:
I found a good deal that I really like for $160K, which has excellent cash flow potential. Initially, I was planning for a quick sale and contacted my private money lender for a hard money loan. My plan was to put down 35% while she would cover the remaining 65%.
However, the seller has requested to be in escrow for 45-60 days so that he can complete a 1031 exchange and use the proceeds to buy another house within that period. Given this new information, I'm considering whether it might make more sense to opt for a conventional loan instead of a hard money loan, due to the lower interest rates associated with conventional loans. Alternatively, I could stick with the hard money loan and refinance into a conventional loan later.
I would appreciate any suggestions or advice on this decision.
How did this turn out Emmanuel?
-
Lender
- 1-917-830-7144
- https://brooklynfundinggroup.com/
- [email protected]
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Quote from @Anderson S.:
Quote from @Emmanuel Ola:
I found a good deal that I really like for $160K, which has excellent cash flow potential. Initially, I was planning for a quick sale and contacted my private money lender for a hard money loan. My plan was to put down 35% while she would cover the remaining 65%.
However, the seller has requested to be in escrow for 45-60 days so that he can complete a 1031 exchange and use the proceeds to buy another house within that period. Given this new information, I'm considering whether it might make more sense to opt for a conventional loan instead of a hard money loan, due to the lower interest rates associated with conventional loans. Alternatively, I could stick with the hard money loan and refinance into a conventional loan later.
I would appreciate any suggestions or advice on this decision.
How did this turn out Emmanuel?
I eventually used a DSCR loan. Will close in few days.