Private Money Lender Wants Mortgage on Auction Property loan-how?

2 Replies

I have a very flexible private money lender who is willing to provide funds to acquire a house at auction.  The intention would be to perform any necessary rehab once the title has been cleared to get it rent-ready and then refinance the home to extract the investment along with some of the equity.  

I have found that many hard money lenders with rental 30-year type loans want a mortgage in place before they will refinance based on actual value, otherwise, they will only lend on the amount of purchase (we're buying 300k homes at 1/3 of the price).

So to set this up for a refi, how do we go about and represent the money loaned to aquire the property at auction as a mortgage after the fact if the title will be placed in my name immediately after the auction closes?  

Thank you for your creative help!


You hold the title, the lender holds the promissory note aka "note" or "paper." They put a lien on the property, so that you can't sell it without paying them off.

There are lots of people here who could give you a copy of the promissory note they use- @erik stark has one for free on his website. I have a copy of his, but I haven't used it yet.
You'll want a legal professional who is an expert in this stuff to look over the note and help you figure out the notarization and other filing steps. Does that answer your question? Good luck!

If your lender is comfortable Giving you the money Before you have title, no problem. You use his money to pay at the auction, shortly after you execute, he records, a mortgage/deed of trust. Notes don’t get notarized/recorded, just the mtg/deed of trust.