When should you refinance a hard money loan?

Hard money loan refinancing on residential properties is a standard loan scenario for investors and borrowers seeking to benefit from equity in their existing properties. You can use funds from refinancing to purchase a new house or pay down debts. Recently, most people who refinance a hard money loan in California do so to buy time to complete scheduled repairs and upgrades and maximize profits.

Here’s why refinancing a hard money loan can be a beneficial option, who qualifies for hard money refinancing, and what the requirements are.

Is Refinancing a Hard Money Loan Possible?

Yes! You can refinance a hard money loan using either traditional or private lenders. Some borrowers use traditional lenders’ services to secure long-term financing. This option is excellent for those who have met their need for a hard money loan, intend to live in the home or rent it out, and have time to refinance with a bank or other conventional lender. However, many investors have time constraints and require fast funding with flexible terms, which banks can’t offer. These borrowers usually turn to private lenders who can provide multiple refinancing options, including rate-and-term refinancing and cash-out refinancing.

Who benefits?

Refinancing a hard money loan gives you the freedom to move at your own pace to accomplish your most ambitious real estate dreams. Here are a few typical scenarios where a client would seek out a private lender for refinancing a hard money loan:

1. The lender can’t qualify for traditional financing.

2. The lender doesn’t have time to wait to refinance to a conventional mortgage, a process that can take several months.

3. The lender wants to change the interest rate or length of the term.

4. The lender current hard money loan is almost due, but they want to keep the property or aren’t ready to sell it yet.

5. The lender has another investment option that needs to be seized quickly.

6. The lender needs cash for their fix-and-flip project.

7. The lender needs to avoid foreclosure.

8. The lender needs more time to finishing building a home before selling.

A hard money lender can fund your deal in the situations described above if it is realistic and fulfills the requirements below. 

Qualifications for Refinancing

Private lenders are committed to building relationships with borrowers and investors for many upcoming deals. These deals are based on trust, respect, and transparency between the lender and client. Lenders offer liquidity quickly to clients who can prove that they are able to repay the loan. 

Refinancing a hard money loan requires that the borrower prove their ability to  to repay the loan. When you go to refinance, maximize qualifying factors like your credit score, income, and debt to get the best rates . The better your credit score, the better terms you will get. You can use your home rented out or your income for the application. Private lenders carefully study your debt-to-income ratio and examine your monthly hard loan debts. Make your hard money loan payments on time because your new lender can request a payoff from your hard money lender as part of the refinancing process. Make sure you have plenty of equity, renovate it if needed, and put down a decent down payment. A good credit score and a track record of on-time payments is your ticket to success. 

Benefits of Refinancing 

The advantages of refinancing can be summarized in three words: speediness, flexibility, and simplicity. 

– Quick approval. Generally, it takes about a week to finalize funding, but some private hard money lenders can offer same-day approvals and in-house underwriting. 

– Flexible underwriting terms. Private lenders focus on a client’s equity over their financials and evaluate each case individually, with the possibility of revising repayment schedules and the loan’s duration.

• Speed and ease of transaction. Minimal documentation, and no requirement for tax returns or proof of income bring borrowers back to hard money lenders. You only need to submit your updated plan, progress, and exit strategy.

Refinance Hard Money Loans with Lending Bee

Even in the most unique and complicated scenarios, hard money loans have a variety of refinancing options. Lending Bee Inc. offers rate-and-term refinancing as well as cash-out refinancing. The cash you get from refinancing will put you in a much better position to start a new deal. 

Years of experience and a proven track record have made us the best lender for investors and borrowers looking for hard money cash-out refinance loans in California. A common-sense approach to lending and fast refinancing are our main priorities. We don’t verify the borrower’s income or credit score and will do our best to approve your refinance as quickly as possible if you have sufficient equity in the property.

Have a current hard money loan that needs refinancing? Call Lending Bee Inc. at (323) 448-3956 for more info, or fill out our pre-approval form on our website.