Refi to pay off hard money loan

[Hugo Alves]

I just finished watching Brandon Turner's video onhis BRRR strategy for his 4 property deal. He presented how he completed a refi at 12 months, which obviously brought down his payments and cleared the HML.....right? That's where i'm confused. The property value did go up but with a refi being 70% of the value of the home, does the bank give you this money and then he used it to pay the HML?

Still trying to understand HML in general. Any help would be great as i have a property that i can capitalize on soon but what to makes sure i'm understanding the HML and the refi to pay it off.

Thanks in advance

[Shaun Weekes]

Originally posted by @Hugo Alves:

I just finished watching Brandon Turner's video onhis BRRR strategy for his 4 property deal. He presented how he completed a refi at 12 months, which obviously brought down his payments and cleared the HML.....right? That's where i'm confused. The property value did go up but with a refi being 70% of the value of the home, does the bank give you this money and then he used it to pay the HML?

Still trying to understand HML in general. Any help would be great as i have a property that i can capitalize on soon but what to makes sure i'm understanding the HML and the refi to pay it off.

Thanks in advance

The bank will pay off the existing lien and then take over 1st position as the mortgagee. The only time that you'll see money is when you're doing a cash out refinance.

Example: For SFR

You buy a home selling for 100K and you put down 20% or 20K. HML at 8% with 2 points at 80K. 6 months down the road your home is now worth 150K. At this point you have 2 options and the first one is to just refinance what you owe. (80K) or get cash out at 75% (150K x 75% = $112,500)

In both options the new lender will pay off the HML 80K and then it's done or with cash out you get $32,250.

I hope that makes sense and PM me if you have additional questions or post on here and other BP members I'm sure will help.