BRRRR's Third R - Refinance

[Scott Kimberly]

This might be an incredibly newbie question, but I feel like it gets glanced over a lot.

How does the Refinance portion work from the perspective of the bank? Let's say I have a house with a completed rehab that is valued at 100k. I used hard money to get this deal, so I have a loan balance of (for the sake of simplicity) 75k. 

Does the bank view this as a First Lien against the property? If so, would the transaction I want to carry out with the bank be a genuine refinance from their perspective? I get that we want to replace the hard money loan with a larger mortgage, which would allow us to take cash back out and pay off the hard money loan (ideally).

I apologize if I am oversimplifying a lot, I really want to be able to go to a bank and have an intelligent conversation with them about what I am trying to do.