Newbie investor looking for advice. Purchased a foreclosed property with $549k and 10% down through a hard money loan for an initial fix and flip. With the current market, I'm considering changing my exit strategy and refinancing after the rehab is complete so I can live in one unit and rent out the rest of the home. ARV is about 860,000 and I'll have to pay the HML 644k to cover the remaining loan plus rehab costs that they're covering.
Will I be able to refinance so I can pay off the HML and switch to a conventional mortgage? If so, how does this work and how much should I expect to spend?
Lender · Tampa/St. Petersburg/Sarasota FL and Knoxville/Sevierville/Maryville, TN · Member since 2018 · 361 posts · 178 votes
3y
Yes, you should be able to. You will need to be able to qualify for the conventional loan payments, and it will need to appraise. If you are just paying off the hard money loan, you should be able to do that as soon as work is done, and it will appraise and qualify for insurance. If you are hoping to pull equity out you may need to hold it for a certain number of months.
Lender · Tampa/St. Petersburg/Sarasota FL and Knoxville/Sevierville/Maryville, TN · Member since 2018 · 361 posts · 178 votes
3y
Yes, you should be able to. You will need to be able to qualify for the conventional loan payments, and it will need to appraise. If you are just paying off the hard money loan, you should be able to do that as soon as work is done, and it will appraise and qualify for insurance. If you are hoping to pull equity out you may need to hold it for a certain number of months.
Flipper/Rehabber · Marysville, WA · Member since 2020 · 216 posts · 126 votes
3y
Depending on if you try to get an asset based loan (not using your income debt ratio) you may need to have the property already on a 1 year lease before they will fund.
Newbie investor looking for advice. Purchased a foreclosed property with $549k and 10% down through a hard money loan for an initial fix and flip. With the current market, I'm considering changing my exit strategy and refinancing after the rehab is complete so I can live in one unit and rent out the rest of the home. ARV is about 860,000 and I'll have to pay the HML 644k to cover the remaining loan plus rehab costs that they're covering.
Will I be able to refinance so I can pay off the HML and switch to a conventional mortgage? If so, how does this work and how much should I expect to spend?
It's just a refinance, so you should be able to do that.
Understand you won't be able to use boarder income to qualify and if it's now going to be owner occupied, DSCR loans will not be an option.
There's a lecture to be had here about changing plans mid stream, making sure you qualify for the different type of loan that you're asking for before you need it and the beauty of having a plan and working your plan.
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
3y
Yes, seasoning period is 6 months. You will pay for closing costs in the cash out refinance, make sure you include in your budget. You can anticipate 15-25k in this case