Closing Costs, Refinancing, and Hard Money Lenders

[Charlene Stovin]

Hello

I have read on a lot of posts, people take out a hard money loan, get the home ready to rent or flip, then refinance the home loan.  I may have mistaken some of these posts, but when you pay the original closing costs for the home and then refinance within a year to two years - or less, doesn't that cost a lot?  Meaning - I have heard if you can't drop your mortgage by a point, preferably 2, it isn't worth refinancing due to how long it takes to recoup fees)

I am trying to find out I guess what are the disadvantages to hard money loans; I am assuming because they are at a higher rate, that is why people refinance.  But, I don't have my 20% down, I can't live in one part and rent the other - I already have a home.  I don't have any relatives willing to give me money.  I could take a down payment out of my employer sponsored 401K, but that is going to cost me a lot given that is 22-30K I am not making money on in my 401.

I want to understand the fee structure better of what this all looks like when doing a hard money loan to get into your first home.