HML requiring 25% skin? Why wouldn't I just do conventional?

3 Replies

We just finished the refi on our primary home, that is also a rental unit with garage apartment and basement apartment essentialy paying our mortgage.  We also got another rental unit from a family member who couldn't sell, so we took it over and invested some cash to get it rentable, which it now is leased.  We were put on the deed in August, our broker said it had to season 6 mos before we could cash back refi, meaning sometime in January.

In the meantime I ran across what I see as a great deal, but putting 25% in for the downpayment would wipe out our current cash reserves, which I learned the hard way is a no no, so I am adamant on that.

Filled out paperwork online for a HML that wanted 4 points to do the loan, at 11% for 12 mos. I put in the paperwork we have 10% available, plus we would be able to do the rehab out of pocket (another 10k or so. Cosmetic only.) But they also said they required 25% down...If I had the 25% I would go conventional. It is a buy and hold...

Growing pains, I know. I guess I was surprised at the HML as I thought this was exactly the kinds of deals they should be used on. More or less a bridge loan to purchase, then to season until the refi / cash back could be done. Am I missing something?

@Neal Little

Shop around. You have experiences so you should be able to leverage that.

@Bob Green might be able to help. 

@Neal Little I agree with @Chris T. that you should shop around.  Sounds like a good deal, and you sound like a solid borrower, so I would imagine you would be able to find someone with better terms than what you were quoted.  

Your sentiment about going conventional if you had 25% down is slightly misconstrued as most conventional lenders would probably not lend on a distressed property.

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