Refinance Hard Money - what does it look like?

[Samuel Carmichael]

How does it actually look getting my down payment back from a hard money lender? If I acquire a 100,000 property with a hard money loan, and put 20,000 down....when I do a rate and term refinance, I assume the new lender pays the hard money lender directly. If the property value is 135,000 and I put a 100,000 mortgage on it....is that technically a cash out refinance because I am getting my down payment back? Or does the hard money lender give me the down payment back? How does it actually look getting my down payment back from a hard money lender?

[George Despotopoulos]

You can do it either way. As a cash-out or rate-term. A cash-out might require you to wait a little, at least 6 months, even in the non-bank lending scene. 

If you do a rate term refinance basically the lender is paying off your existing mortgage and recording its mortgage against the property. If you do a cash-out and you've built up equity, either through improvements, paying the loan, or market conditions, you can get up to the the lenders max LTV. The proceeds at closing will be used to pay off the existing debt and you would receive the rest.

Most lenders in the non-bank/non-traditional space that work with hard or private money will require that the cash-out proceeds are used for a business purpose and not any consumer purpose (or personal, family, or household purposes).