Real Estate Investor · auburn, GA · Member since 2009 · 24 posts · 0 votes
How does it work...refinancing before a hard money loan expires. Do you still need a down payment? How do you qualify if you didn't before? Any help from anyone who has done this would be greatly appreciated. Thanks
This is really a question for your refi lender. Typically if you own the property for at least six months, and are doing a rate and term refi (no cash back, just paying off the hard money loan) you can use a new appraisal. If the new value puts your loan payoff below the lenders LTV you would not need any cash. Typical LTVs are 70-75%. If the loan payoff plus refi costs are more than the max LTV, you'll have to bring cash to the refi.
You'll need good credit. I thought 720 was the threashold, But a friend who just applied for a mortgage was told 740. You'll need income.
If you've owned it less than six months, the "value" will be what you paid. Some lenders will also include documented repair costs.
Traditional Mortgages are so hard to qualify for now that you best have a good exit strategy back up besides a refinance. Now a days there are strict LTV requirements, income almost always must be W2 and credit must be squeaky clean unless you are applying for an FHA loan. When using hard money bottom line you should have a 2nd exit strategy. NEVER count on a refinance in this market as rules and guidelines are changing daily. If you qualify when you close the deal you may not six months later.