I am looking for the pros and cons of hard money lending. Can you get a hard money loan to use as a down payment for your conventional mortgage? i have found another good deal, but i dont have the funds to get it conventionally right now after just purchasing our first property. I did just buy Brandon Turner's Low/No $ down book today, so i am hoping to find a gem in there as well. Any advice on how to move forward on deal 2 would be appreciated!
Yes you could certainly use a hard money loan as a down payment. Keep in mind the interest rate will be much higher along with extra fees. Most people use the Hard money loan for flips as they will refinance or sell the house to pay back the loan. I have heard of people paying upwards of 15% interest on a loan.
Have you thought about an fha loan? 3.5% down, however you will be required to live in it a few years. However if you have some equity in the property you can get a home equity line of credit and use that as a downpayment on another property...
There are also quite a few podcasts that cover this exact topic. I highly recommend listening to those.
hard money is usually for non owner occupied properties with a first position mortgage.
Also, I don't believe a bank will loan you money using a down payment that has been borrowed.
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