Hard money cash out refinance loan

Atlanta, GA · Member since 2019 · 45 posts · 34 votes

Hi all -

I have a house on the market that is not selling. It’s priced below value, but people aren’t fond of the area, low walkability score, near a bus stop, etc.

I’m nearing the end of a hard money loan and I’m wondering if it’s possible to do a cash out refinance on a HARD MONEY loan. Will someone lend me money to pay off another hard money loan?

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Matthew Kwan

Lender · Seattle, WA · Member since 2022 · 482 posts · 768 votes

You can exit your hard money loan to conventional with lower rates + assuming you have the sufficient income to qualify. However, not everyone has the income to qualify conventional, so the alternative route would be DSCR loan where the program doesn't look into your income, instead it evaluates based on the subject property rental performance based on the ratio system.

@Carlos Valencia @Albert Bui

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Mike GrudzienPro Member
Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
2y
I wish I could say more, but: ouch! I feel for you.
Mike
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Matthew CrivelliBusiness Member
Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
2y
Quote from @Lisa Sluss:

Hi all -

I have a house on the market that is not selling. It’s priced below value, but people aren’t fond of the area, low walkability score, near a bus stop, etc.

I’m nearing the end of a hard money loan and I’m wondering if it’s possible to do a cash out refinance on a HARD MONEY loan. Will someone lend me money to pay off another hard money loan?
Right now, its near impossible to refinance a hard money loan into another hard money loan. I would suggest refinancing into a 30Y DSCR loan with little to no prepayment penalty. This is a better option than going into default. You could also reach out to the original hard money lender and ask for a 3-6 month extension.
[email protected]413-348-8346
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Brandon Croucier
Lender · Nashville, TN · Member since 2024 · 700 posts · 284 votes
2y
Hi Lisa,
Even though it is hard to do, it can be done.
I do them pretty frequently actually.
Happy to connect!
0 Reply
Matthew Kwan
Lender · Seattle, WA · Member since 2022 · 482 posts · 768 votes
2y
You can exit your hard money loan to conventional with lower rates + assuming you have the sufficient income to qualify. However, not everyone has the income to qualify conventional, so the alternative route would be DSCR loan where the program doesn't look into your income, instead it evaluates based on the subject property rental performance based on the ratio system.

@Carlos Valencia @Albert Bui
1 Reply
Andrew Lax
Investor · Miami · Member since 2020 · 70 posts · 34 votes
2y
Quote from @Lisa Sluss:

Hi all -

I have a house on the market that is not selling. It’s priced below value, but people aren’t fond of the area, low walkability score, near a bus stop, etc.

I’m nearing the end of a hard money loan and I’m wondering if it’s possible to do a cash out refinance on a HARD MONEY loan. Will someone lend me money to pay off another hard money loan?

Ask your current lender to extend ....
0 Reply
Michael Dumler
Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
2y
@Lisa Sluss, please message me the property address. While it may be a long shot, my team and I work with buyers/investors who may be interested in reviewing the deal to see if we can help out here. Thanks!
0 Reply
Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
2y
Getting an extension if you can will be a better move. But yes you can refinance up to 75% of the listed price or appraised value on a bridge loan
[email protected]818-269-7983
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Dave Skow
Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
2y
@Lisa Sluss- thanks ...many varables ...is the hard money a loan with a lien on the proeprty ? if so - are you wanting to borrow just enough to pay off the loan and cover refi costs or are you wanting to pull out more funds over and above the loan balance ? when did you buy it ? price ? whats loan amt ? what is current value ?
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Andrew Zamboroski
Lender · Member since 2021 · 495 posts · 130 votes
2y
Quote from @Lisa Sluss:

Hi all -

I have a house on the market that is not selling. It’s priced below value, but people aren’t fond of the area, low walkability score, near a bus stop, etc.

I’m nearing the end of a hard money loan and I’m wondering if it’s possible to do a cash out refinance on a HARD MONEY loan. Will someone lend me money to pay off another hard money loan?
It may be possible to do a refinance into a bridge loan. This could give you time to sell your property. Happy to connect.
0 Reply
Brittany MinocchiBusiness Member
Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
2y
It's possible if the numbers work out. Since it's currently listed, you're likely limited to a bridge loan. If you plan to take it off the market and rent it out, DSCR is an option. You could also ask the current lender for an extension. Feel free to reach out to discuss.
[email protected]330-354-6590
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Carlos Valencia
Lender · 92703 · Member since 2022 · 326 posts · 538 votes
2y
Hi Lisa,

Refinancing out of the hard money is possible. You can do a DSCR refinance. Assuming the value comes in and the rents aren't too low for a decent ratio you maybe able to get enough money to save you. But we would need to look at the total picture to make sure that's even an option. Last resort would be to ask your current hard money lender what it would cost to extend the loan. Sometimes that option is available and it works out.

@Albert Bui @Matthew Kwan
1 Reply
Albert Bui
Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes
2y
Quote from @Lisa Sluss:

Hi all -

I have a house on the market that is not selling. It’s priced below value, but people aren’t fond of the area, low walkability score, near a bus stop, etc.

I’m nearing the end of a hard money loan and I’m wondering if it’s possible to do a cash out refinance on a HARD MONEY loan. Will someone lend me money to pay off another hard money loan?

Yes Lisa you can refinance out depending on what your situation is:

- Full Doc conventional loans will require Income, assets/value of the property, and credit to qualify to refinance out

- DSCR loans only require market rental income and credit + enough assets for monthly payment reserves 3-6 months (no personal income or other liabilities are factored in, just the property in question)

- Refinancing into another private loan - this is only a bandaid temporarily to provide aide but will not be a permanent solution since most private loans term up or are due in 6-12 months after funding

@Matthew Kwan

@Carlos Valencia
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Drago Stanimirovic
New to Real Estate · Miami, FL · Member since 2024 · 1k+ posts · 455 votes
2y
Yes, it is possible to do a cash-out refinance on a hard money loan, but it can be a bit tricky. Not all traditional lenders will refinance a hard money loan due to the perceived risk, but many specialty or non-QM (non-qualified mortgage) lenders may be willing to work with you. These lenders are more flexible, especially if the property has equity and your credit and financial situation are solid.

Here’s what you can expect:
- LTV (Loan-to-Value): The lender will typically assess the property's current value and lend a percentage of that, often around 65-75% LTV for cash-out refinances.
- Requirements: Expect higher interest rates than conventional loans and potentially stricter terms, but it should still be better than the hard money loan.
- Timeline: Start the process early to avoid issues with your hard money loan coming due.
You should reach out to lenders who specialize in investment property refinancing. If you'd like assistance in finding a suitable option, I’d be happy to help!
Best,
Drago
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