Can I use hard money to Reinstate a loan?

Question

I have a deal I’m trying to buy from a wholesaler.

I’d like to buy, reinstate the existing loan, then flip. Is this possible? Instead of using hard money to pay off the entire existing loan?

Erik Estrada · Answer

Hey Marvin,

This really depends on what kind of lender is on the 1st and how long the existing owner has been delinquent. Some lenders are not okay with assumable mortgages. Some are.

Chances are unlikely that a lender would want to have the current borrower to remain on the mortgage and you just assume the payments.. But you would need to ask the current servicer/lender.

It might be more of a headache than just financing the property and paying the lender off completely.

Do you know if there is a lis pendens or a NOD on title? That will also be another hurdle..

Andrew Postell · Answer

@Marvin King So, the direct answer is "no". Technically, the wholesaler has this under contract. You can't even go to the seller until the wholesaler's contract expires. If you found a property on your own, then you can negotiate with the seller on what to do and you could acquire the property "subject to" the existing lien or, as mentioned above "assume" the mortgage (if the mortgage is even assumable). In both of those scenarios, you would be likely be coming out of pocket entirely on your own. Meaning, you cannot use Hard Money to do this. There might be some private lenders who might help with it...but that's really unlikely. So, most of us DON'T do that if the mortgage needs to be caught up substantially (like over $10k). But you could catch the mortgage up once contract expires or on another deal where you could negotiate with the seller on your own. But usually, you have to do it without a loan.

Can I use hard money to Reinstate a loan?

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