Refinancing a Hard Money Loan

7 Replies

I would like to know about refinancing a Hard Money Loan on  a buy and hold property.  My questions are:

1.  If I put a down payment on the hard money loan, do I have to have a down payment for a refinancing?

2.  Can I refinance for 30 years term and no down payment?

3.  What is the process on refinancing a hard money loan to a long term loan?

"Down payment" applies to purchases only. On a refi (of any type) there's no money to put into the deal. It's just an application to refinance the current loan. It could be rate and term, meaning you're simply refinancing the existing loan into a new one with a new rate, new term, same loan amount. No cash out. Then there's a cash out refi, where, for example, you have a current value (to be verified by lender) of say, 100k, but you owe HML 50k, so that you have 50k equity. However, the best I've ever seen is 90% on NOO properties (I have one - a HELOC from PenFed), which means in this example, a loan for 40k minus closing costs. So to be clear, in this example, 90 LTV Cash Out Refi means I can get a loan for 90% of the appraised current value of the property and the process is much the same as when you shopped for a purchase loan. But if 50% is already leveraged, there's 40% left for you to wet your beak. ;-)

@Mark Weinberg the HML will ask what's your exit strategy as this loans are not long term. 1-sell 2-long term refinance. The new bank will finance the entire loan amount owed and if you gained equity on the deal you could cash out the equity. Given there is enough to pull out.

@Mark Weinberg i’ve done this a few times. it’s not really worded as “down payment”. instead, you will only get 65-75%, maybe 80%, loan to value. basically, the difference between your max loan to value and 100% ends up being your “down payment”. meaning, if you get 75% loan to value on a refinance, how much money do you have left in the deal? 25%. this money left in the deal acts as your down payment.

all is good if the amount you need to refinance is less than 75%. meaning, if the property is worth 100k, you're getting 75% LTV and you only owe 60k on your current loan. You probably won't need to come to closing with any money (don't forget closing costs and prepaid amounts). if you owe 80k, the property is worth 100k and you're getting 75% LTV then you would need to come to closing with money.

yes you can refinance into a 30 year loan.

the loan process can take various forms. most likely you will be underwritten similarly to a regular purchase. i would plan to have all your documentation in order.

let me know how else i can help.

Originally posted by @Mark Weinberg :

I would like to know about refinancing a Hard Money Loan on  a buy and hold property.  My questions are:

1.  If I put a down payment on the hard money loan, do I have to have a down payment for a refinancing?  No, not if you have enough equity in the new appraised value after your renovations are complete and the property is leased.

2.  Can I refinance for 30 years term and no down payment?  Yes. 30 year loans are available.

3.  What is the process on refinancing a hard money loan to a long term loan?  Same as the purchase, but without the down payment hassle.

 

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