Process of Re-financing out of Hard Money Loan

[Dallin Hernandez]

Hey guys! I am looking into buying my first rental property with hard money.

I am curious to know the process a conventional lender would take to refi out of the hard money loan for the rate and term. Do they check your credit, income, and DTI? Or is it based on the equity, appraisal, and ARV of the rental?

Any insight would be great!

[Stephanie P.]

@Dallin Hernandez

Welcome to Biggerpockets

Most lenders, conventional or portfolio, will require 6 months on title and for the property to be stabilized before you can refinance it into a long term loan product. Stabilized means no construction and occupied. From there, it's a normal loan. If you want conventional pricing, then you have to go through the entire process with credit, income and of course title and insurance. If you don't qualify for conventional for one reason or another (usually income) then a DSCR loan or Debt Service Coverage Ratio loan would be the next best thing. There is no income verification (meaning no tax returns or paystubs) and the loan is based on the property's income along with the guarantor's credit. Long term (30 year fixed) with rates these days typically in the 4's with a couple of points.

Stephanie