HML refinanced into 30 year?

[Samantha Baker]

What should I consider when using a hard money loan (HML) to purchase a property below market value, using the HML to finance 100% of the rehab, and finally refinancing into a 30 year mortgage afterwards.

I want to make sure I am thinking through each scenario and not missing any expenses

[Nathan Grabau]

When you are underwriting the deal, you want to make sure you have the coverage to be able to handle a higher than expected rate and a lower than expected appraisal. With most cash out refi products I know only allowing up to 80% LTV, you want to make sure that you do not lose the deal because you cannot pay off the hard money lender because the appraisal comes in low or rates going up kill your DSCR. The longer you expect the reno to take, the more wiggle room you should give yourself.