Refinancing HML to conventional with bad credit

[Jon Mark]

Hello all, I have found a deal that I need a hard money loan for since I cannot put 20 percent down on the property, it’s 4 units all on conjoining properties, it will be around 430k to get the deal to work. However, if I acquire the deal, I currently have bad credit Will it be possible to refinance out of the HML if I show good cash flow and signficant equity, even with bad credit? Thanks for any advice

[Stephanie P.]

Originally posted by @Jon Mark:

Hello all,

I have found a deal that I need a hard money loan for since I cannot put 20 percent down on the property, it’s 4 units all on conjoining properties, it will be around 430k to get the deal to work.

However, if I acquire the deal, I currently have bad credit

Will it be possible to refinance out of the HML if I show good cash flow and signficant equity, even with bad credit?

Thanks for any advice

 A few things

Just because it's a hard money loan doesn't mean you can get in for less than 20%.  You're probably going to have to come up with 20% of the purchase price, front the renovation money (and get repaid in draws) and pay closing costs up front at close.  

Bad credit, as others have said, means different things to different lenders.  If you don't have any bankruptcies in the last 3 years, no foreclosures in 5 and you're less than 2x30 on your current primary residence with a 650 middle score or better, lots of people will talk to you; not Fannie Mae lenders so not Fannie Mae rates, but lots of people will talk to you.  If you've got a score below 650 and you don't pay your primary residence as agreed, not many will talk to you.  If your have a recent BK or credit is worse than above, just wholesale the deal and make some cash off of it if you can.

Best of luck

Stephanie