Private lender to bank refinance: obstacles?

Question

Hi BP,

I'm formulating my options for financing an owner occupied 2-4 unit in upstate New York. I found a lending service (Bankers Healthcare Group) specific for health care professionals (I will be a physician assistant next May). Given the many benefits of buying a property with cash, my plan is to use a private loan from this company and/or from family/friends to buy the property and then refinance the property using a bank loan, thereby paying off the private lender/s and getting better terms. I'm wondering what types of obstacles/constraints I might run into with this plan. Thanks all!

Andy

Bill Goodland · Answer

Hey Account Closed, fellow PA investor here. I have my 10th unit under contract right now and started less than 2 years ago and have used traditional financing for all of them. If you're going to owner occupy, why bother going through the hassle of creative financing if you're going to have a strong consistent W2 income? I used an FHA loan for my first triplex and it was pretty easy and went fairly smoothly with only 3.5% down and all of the closing costs covered by the seller. In my opinion, using private money to close deals makes the most sense when you're not owner occupying and the bank would require 20-25% down.

Scott Wolf · Answer

Account Closed, I know that there is a doctor's loan for 0% down that can be obtained.  You should google it and find a mortgage broker that is familiar with it.

Jesse Rivera · Answer

You can refi the next day, if all you're doing is paying off the old loan. If you want cash out, 6 months.

Jesse Rivera · Answer

Just finished 2 refinances with private loans. Neither of the lenders (not companies, private individuals) had the original note nor Deed of Trust (CA is a deed of trust state). So we had to jump through extra hoops to get it done. The icing of the cake is one of the lenders lives in Holland and the Embassy was not open (for Notary). More hoops to jump through.

Long story short, refinancing from a private lender is not a big deal, if they have the paperwork needed. You should be fine.

Account Closed · Answer

@Bill Goodland Great to meet you Bill, very cool to see a PA doing what I'm hoping to do in the future. How long did the FHA loan property take to acquire? I was under the impression that FHA loans could be a hassle as well, but I don't know to what degree.

Account Closed · Answer

@Jesse Rivera Do you know if there is a typical period of time you have to own the house before the banks will allow you to refinance the property?

Private lender to bank refinance: obstacles?

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