Can I turn a hard money loan into a traditional loan?

[Leanne Sorg]

I am rehabbing and flipping a property in Chicago 3br/3ba. I took out a hard money loan on the project but unfortunately the house needs alot more work than I originally intended and I don't think I'll make a reasonable profit by selling it. I'm not happy with some of the contractors work. Can I convert my hard money loan into a traditional loan with a mortgage company so I can try to turn it into a rental instead? Do most hard company officers frown upon this?

[Sylvia H.]

Quote from @Leanne Sorg:

I am rehabbing and flipping a property in Chicago 3br/3ba. I took out a hard money loan on the project but unfortunately the house needs alot more work than I originally intended and I don't think I'll make a reasonable profit by selling it. I'm not happy with some of the contractors work. Can I convert my hard money loan into a traditional loan with a mortgage company so I can try to turn it into a rental instead? Do most hard company officers frown upon this?

You state you are rehabbing and flipping. If the house is unfinished you would not be able to get traditional financing. You can do a rate term refinance when the house is finished and turn it into a rental but this would have to disclosed to the new lender as such. There would be a maximum LTV the bank would refinance because it is a rental property. Rate would be higher and points as well.