Just a suggestion. Instead of asking for cash out, ask the lender if they would consider using part of the mortgage proceeds to pay off your hard money lender and your credit cards (i.e., they cut the checks directly to them). This reassures them that the money will indeed be used to reduce your debt and strengthen your credit. If I were you, I would not ask for cash for yourself at this point. The most important thing here is to reduce your debt and strengthen your credit and once you are a homeowner with equity in your home, borrowing becomes much easier. Assuming you have equity in the property because you purchased and rehabbed correctly, you could go back to this lender (or another lender) at some point in the future and apply for a home equity line of credit. Be very careful and NEVER use the equity line for depreciating consumer items! Good luck.
Posted by Diane on September 25, 2003 at 15:46:21:
My husband and I recently purchased a 2 family “junker” with funds from a hard money lender for the cost of the house and fix-up. Hubby, and our two sons and I are doing just about all the work as my husband is in the electrical and construction field. We will be living on one floor and renting out the other. We have been working are way back from a bankruptcy discharged 4 years ago. My question is : I approached a mortgage company about financing the property when it is completed and also taking an extra $10,000 out at closing for ourselves. (We were pre-approved a year an a half ago by this company when we started looking around) We borrowed $52,000 of hard money and want to get financed through a mortgage co. paying off the money lender and pay off some credit card purchases we are using for the house and put the rest in the bank. The mortgage officer said that taking money out at closing could be a problem since we have only owned it since Sept. 5. Is this typical? What else are we to expect when we want to refinance with a mortgage company after doing extensive rehabbing on a property? Thank you in advance for any assistance or direction to any archives.