Is it easy to Refinance out of a private lender loan?

[David S.]

Hi.

I am set to borrow 130k to buy and rehab a property at an 11 percent interest rate (I only have to pay the monthly interest and closing fees) from a private lender. I expect the home to appraise at 170k-200k in 6 months when it's fixed and rented out to nice grad students.


Will I potentially be stuck with this loan or will conventional banks be lining up because of the high AVR/loan ratio and rental income? My credits great and I have some reserve cash and 40K in rental income but I'm not working now. Thanks!

[Stephanie Medellin]

@David S. Refinancing out of a private loan is basically the same as refinancing out of any other loan.  Just be sure to keep a copy of your note, and be able to document the agreed upon payments on time every month through cancelled checks.  Since they will probably not report this loan on your credit, you need to be able to show on time mortgage payments with your application.  Whether you can qualify for a conventional loan without working depends on whether your rental income can support your personal housing and monthly expenses and the rental property expenses.  It really depends on how much positive rental income is on your tax returns.