I purchased a single family home 2 months ago for $138,000 using hard money, I spent about $7,000 for rehab costs and now have it listed with a realtor for $179,000. My question is will I run into any problems getting this refinanced in about a month if it does not sell. I would like to refi to do a lease purchase or rent as a last resort. I am not trying to pull out all of the equity, just enough to cover the loan and rehab costs. Are there any seasoning issues or does it matter that it has been listed on the MLS? Any advice would be appreciated.
You will run into problems with about 95% of all lenders.
Seasoning and the mls can be major issues.
There are several lenders that can do this. Be sure to work with a mortgage consultant who understands these guidelines and already has lenders lined up.
When lenders make a loan they want to have the loan active for some time so they can make a profit on the loan. If you refinance, then sell within a few months, then most lenders don’t make much money, but have all of the administrative costs. That is why many lenders have prepayment penalties. They want you to have the loan for at least 1-3 years.
Some lenders will do the loan if you are selling on the mls, but they will charge a large origination fee - often 3-5 points. That’s where they get their profit.
If it gets to that point, you would be better off taking the property off the MLS, get the renter in on a long contract (12-24 months) then refi.