Hey Guys,
I keep seeing HML are lenders of last resort… I understand that; so if they are so unfavorable what do you guys use them for?
The way i would see using a HML is if timing is of the essence… I would put in two offers conventional 30-60 day closing and another HML closing within 3-5 days for ~20-30% less… Then i would refi…
The way i see it conventional loans are tough to get you into a property (alot of tape and alot of time, body cavity search and all ;)… But, once your in; you should be able to refi as long as you didn’t get raped on the purchase price…
Am i seeing something wrong? Is it not that easy to refi after purchasing via HM?
I would love to hear how you guys decide to use HM vs conventional?
Thanks,
Karim
Karim,
Most of my investor customers these days are coming from HML and refinancing into a conventional loan. It costs a bit more as far as closing costs go, but in the long run it can end up saving you money. Because an HML will only finance up to 70-75% LTV when the time comes to refinance your LTV will be less than 80% even if you roll in closing costs. This alone will save you quite a bit of money because you will not have MI on your loan because your loan amount will be less than 80% LTV. Not to mention that nowadays you need to have a 720 to get MI on an investment property.
Another major difference is cash at closing. To get a conventional rehab loan you need to have at least 10% down PLUS your closing costs. This can add up to quite a bit of money out of pocket at closing. Where a HML may require you to pay closing costs out of pocket but roll everything else in. I would suggest looking at both scenarios with your broker and figure out which is the best way to go for each of your deals. Hope this helps.