Refinancing Out of Hard Money

[Matt Cox]

Hello Everyone,

I've got a scenario that I cannot seem to get one answer on. Every person I ask has a different opinion.....

-I buy a property for 203k using a 193k hard money loan

-The property is worth (and will appraise at) around 275-280k

People have given me one of two answers in regards to refinancing out of the hard money immediately following the purchase.....

1. You can get your new loan for up to 193k (the amount of the loan used to buy the property) + closing costs

2. You can get you new loan at 75% of the acquisition cost (203k*.75=$152,250)

Which answer is correct? Keep in mind, this is a conventional loan. Yes, I know you cannot "cash out" until six months following the purchase. This question does not pertain to a cash out refi. Thanks!