HML or Traditional Loan???

I was wondering what type of financing you guys would suggest as far as purchasing foreclosures. I am getting really close to picking up my first foreclosure for rehab and flip, but want to know the pros and cons of hard money loans and traditional loans.

I am looking for people that are experienced opinnions. What is your guys suggestions? Which one would you focus more on? Thanks

Howdy jk4138:

If you have excellent credit and great banking relations with many CD’s at the bank then go see your banker and tell them what you need and they will probably do it fast for you. Normally banks are slow but cheaper than HML’s. If time is of the essence and you have poor credit but a great deal with equity you probably will be better off with a HML. They can generally close in days once they get all the documents and appraisal. You will be one step ahead to get pre-approved with a HML so when you get a deal they will have already done a lot of the leg work. Keep in mind that most will only loan up to 70% of the after repaired value and some even less. Most will also escrow money for repairs and give you draws as the repairs are completed. I like working with a local lender but there are many that work nationwide that are good too.

LOL and hope this helps some

Anyone else have any suggestions on this subject?

Get your self a TALENTED Broker, not a flunky loan officer in a cubical, and maximize your leverage with a 5 year option arm, shoot for intrest only payments regarless of the possibly of negitive amortization. I’ll tell you why:
you are not going to own this puppy long enough for the down side of the OptionArm to matter and the Intrest Only, (sometimes less), Payments allow you to keep the money in your pocket where it belongs. I preffer a peticular product Ive found becuase of the option to lock the rate at any time should I decide to keep a peticular house longer than the 3 or 5 years. (payments go up drasticly in 5 years).
A final thought: Leverage. Keep that money in your pocket. And on the quick flippers, dont fear the 100% financing, Your intrest rate/payment may go up slightly but who cares, Its better to keep that massive down payment cash Liquid.


Also is there somewhere that I could go to find out more on the interest only loan option as I am not to familiar with that. This is something pretty much only a HML offers correct? Thanks a lot for the info up to this point.


I am not positive where you are, but I am in Minneapolis, and my main squeeze is named Mike Henderson, (and his loan officer Loren) @ pirce wellington mortgage in Minneapolis, 612.465.8003. Tellem Christopher sent you and he will smile, (we have made eachother a few bucks over the years).
Mike just recently, (last year) became an independant Broker, at wich point he started showing me some great products that he simply didnt have access to as a loan officer, Some of the deals he gets are extra sweet due to the relationship he has forged with certian lenders.
I is KEY to find a tallented mortgage broker that either invests himself, or has extensive experience with investors, I would recomend interviewing with as many as you can find, you will know when you have found the right one. My mortgage broker NEVER tells me why something is difficult or complicated, he tells me how we are going to do this, its a simple attitude shift that is hugely profitable. He isnt scared of the commercial lending side of things either, some brokers I have found seem to steer clients clear due to the added complexity of the deals.
Another note I want to add, I went threw 5 brokers or so, but I stick with my current broker threw thick and thin, and HE knows I am not going to go running to shop my loan around (with other brokers) every time there is a bump in the road, I get more energy and better treatment out of him because of it, (the same way you would by not cheating on your wife for instance hehehe) My theory is, he knows there is going to be a steady stream of loans and refi’s from me so he is motovated to keep me with smile on my face. :smiley:


So what are some things that you would say you should look for in a mortgage broker? The reason I ask is I am in the process of working a pre-foreclosure that has around $50,000.00 in equity as the owner only owes about $32,000.00 on the loan plus about $5,000.00 in arrears so I am going to need someone to finance this here shortly if I am able to get the defaulting owner to comply.

I really appreciate the advice and I will definetetly have to give your broker a call. Is there anyway you could possibly give me his number or e-mail as I would like to get a hold of him and ask him some questions as well.


I look for cockyness and success in my mortgage brokers, but these are great questions to dirrect at the professionals, the message I posted (above) has my go-to guys name and number if you want to hear what it sounds like when your talking to a investment savy mortgage broker.

Loren at Pirce Wellington mortgage (in Minneapolis…), 612.465.8003. Tellem Christopher sent you!

Thanks a lot for the contact information. I will definetetly have to give him a call.