When a LLC purchase a property using HM who is the responsable for the Homeowners Ins. and under whose name is that going to be on?
And what if the LLC or owner/manager has bad or no credit?
Thank you
the LLC will get the insurance,if the LLC or owner have bad credit they probable won’t get a HML to loan them the money to do the deal
Underdstood, so what’s the advantage of getting HM if you have good credit??
Isn’t the idea of HML for people with great deals and less than perfect or bad credit?? Otherwise they can just walk in to a Bank and get financing, correct??
I buy a property with hard money, then refinance into conventional financing,because it is a refinance, they will loan me based on the appraised value of the house, not what I paid for it,this allows me to basically finance a much larger portion of the purchase/rehab
lets say i buy a house for $60k, it needs $15k in work, and then should be worth $100k,I can borrow 70% of the after repaired value (ARV) from the hard money lender,when I go to refinance if the appraisal comes in at $100k, I can borrow either $75 or $70k (depending if its mortgage 1-4 or 5-10
If I bought the house with a conventional loan I could only borronw 75% of the $60k,or $45k,a big difference
Andy is right that you ideally want to do a rate & term refinance to rotate into a conventional loan. If you have good credit, good DTI ratios, and a good job, you may well be able to get rehab financing through a small local bank in your community. The terms might be 1 point and 7%, versus HM at 4 points and 12%. And even HML’s want you to have some of your own money in the deal these days.
Call around to all your local savings banks, S&L’s, commercial banks, and maybe even credit unions, and ask about programs for short-term rehab lending. In my community, I can still get this funding through a couple of banks, around the terms I noted above for up to an 18 mth term and interest-only on the loan payments. So there is plenty of time to either do a conventional refinance, or to flip it.