First post here. Sorry it is so long. I have learned so much in the past few days on this site reading every article I can get, thank you for such a great site
My best friend and I are looking to purchase a property that needs to be rehabbed. We want to fix it up and move into it to get out of our rent. We live south of Houston and both of us are 23. We both have $50,000+ careers. I am a barge captain in New York City, working 2 weeks on and 2 weeks off. He is an equipment operator for Haliburton. We both have excellent credit, and few bills.
My question is, If we use a HML for the initial purchase and rehab how hard would it be to go to the bank and refinance the loan. I have read a few posts about the HML’s are becoming more and more stingy. But we are not planning to sell, we are planning to move into this house for a year or so and build up a little equity and ride out this credit crunch we are in. I have found a few deals on the internet where the numbers might work, but I am still at work and there is only so much I can do on a barge. LOL. I haven’t been able to sleep thinking about where this can take me. I hate being away from home and would love to do this full time. I just want to start small and get my feet wet with my own home first and see what happens. I have written a few plans on paper and they keep telling me to do it.

Find yourself a good mortgage broker. Based on what you’re telling me, you should be able to get a good old fashioned construction loan and obviate the need for the HML or the refinance.

Thanks for the quick reply. How does a construction loan work. Does the bank finance the house and the est. repairs as one big loan or are they separate? I guess thats the one thing I haven’t read up about… Found something else to read up on, I’ve been going around in circles the past few days re-reading everything I’ve already read!

I use Regions Bank.

They will loan me 75% of the subject-to-repair value of the house. If the house will be worth $200,000 when done, I can borrow $150,000. If the house costs only $100,000, I can borrow the difference for repairs.

I can draw up to $10,000 at closing without a draw schedule, and thereafter it’s based on inspections.

The pricing is cheap, but it’s slow to close. Also, it’s a six-month deal, so you either need to negotiate your permanent loan at the same time or have some other way of repaying the construction loan. Since I am flipping, I don’t worry about that part. You might want to get that lined up in advance, though.

Paul is offering advice in the right direction (borrowing on FMV), but I’m aware of a program offered in NY that would allow up to 97 ARV (where you can roll in the cost of purchase + repairs + 6 months of mortgage payments + closing costs with interest rates fixed for the life of the loan, 30 year amortization, allowance for 6% seller concessions at rates comparable with conforming loan programs, etc.).

Good luck!


Scott Miller

Well, now we know why one of us is in the mortgage business and the other isn’t! (Because I’ve gotten used to eating three meals a day.) That’s an awesome program, Scott…thanks for sharing it.

My only caveat with such a program, unless the house is going the owner occupied for a long time, is that having a 97% LTV loan on a flip can be hazardous to your health!

If there are programs as aggressive as this in Georgia, I would love to know about them.

LOL—the program will only cater to owner occupied transactions—the program is based upon a 30 YR FXD interest rate, so there isn’t much risk to health or wealth…

I’m not currently licensed in GA (beyond commercial and hard money—this is a conventional loan)—do you want me to check to see if it is offered in GA?


Scott Miller

I’ve got all my ducks in a row for my current projects, but I may reach out to you in the future.



Fair enough—look forward to it!


Scott Miller