I am in the process of bidding on a HUD home and applied for an investment conventional loan pre-approval. After receiving the pre-approval I was informed that I can't flip the property and I would have to hold it for a year. What are the penalties if I sold the property early? I'm also looking into other financing options including hard money. This is only my second flip and I will admit I am afraid of hard money loans because I don't fully understand them. I've also considered a personal loan to cover the entire project from purchase to renovations but I'm still not sold on that due to the risks involved. Any support would be greatly appreciated.
@Maurice Nix Lenders don't like to lend on short period of time. Neither I have seen prepayment clause on mortgages now a days on conventional loan. You should have penalty information in written from lender.
I don't have all the loan details as of yet. I just have the pre-approval and the estimate to close worksheet. Their's a prepayment disclosed on the worksheet though. My loan officer told me that I would have to hold the property for one year if I used this loan.
@Maurice Nix You can ask him about type of loan and what will be penalty they will charge. Its been long time haven't seen any penalty on conventional loan.
Ok, thanks I've already asked him he didn't respond with an answer just informed me about hard money lenders option. The bid closes in a week so I have to expidite finding a lender or I may lose the deal. ARV with a direct comp is 170K on an 70k investment. The comp is a month old in the same neighborhood down the street.
@Maurice Nix There are HML information on this website. You can contact them for details.
thanks I will do that!
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