Updated almost 5 years ago on .
Hard Money To Conventional Loan Refinance
I'm in the process of purchasing a property that I have under contract. I am a little short of purchase price so I have resorted to borrowing from either hard money or private money (which I'm beginning to learn that it's better to use other people's money (OPM) when possible/once I learn how to master this technique). This will be my first time using a hard money lender and if all goes seamlessly, plan to do it again. I have found a hard money lender that has considered me for the amount of $45,000.00 ($15,000.00 Purchase Funds+ $30,000.00 Rehab Holdback) with a rate of 12% and loan term of 6 months. More information on the hard money loan as follows:
$2,500.00 Origination Fee, $500.00 Loan Processing Fee, plus all
reasonable closing costs, including but not limited to appraisals, title work,
legal, etc. The Desktop Appraisal worth $250.00 is also going to be added
to the fees on this Term Sheet.
The purchase price of this property is $28,000 plus closing costs and my rehab bid has come in at $32,500. My anticipated ARV for the property is around $65,000 on the conservative side and I know I will have money left in the property once refinanced. I'll have to pay the "down payment" of $13k plus the other fees associated with the loan and closing. I've already put in an earnest money deposit of $500. I don't plan to be late on any payments so my question is how will the refinance part work out? Guessing I'll just have to find out the seasoning period from the cashout refinance lender. I have one in mind and assume the rates will be between 3.75-4.5%, 30 year conventional loan. Am I doing this whole thing correctly? I'm just jotting this down and hope to get help clarifying what's in my head. My exit strategy is the BRRRR/buy and hold for my rental portfolio. Thanks!